Cable surges on disappointing US ADP data

Cable hit fresh five-week high on Wednesday after being initially boosted by better than expected UK Nov services PMI, while unexpected and strong drop in US private payrolls (ADP report) added to expectations of Fed December rate cut additionally inflated sterling.

The pair was up around 0.8%, on track for the biggest daily gain since late June.

Fresh rally broke through 1.3295 resistance (Fibo 61.8% of 1.3471/1.3009 / 55DMA) and cracked 200DMA (1.3319), nearing another significant barrier provided by the base of falling daily Ichimoku cloud.

Bulls may take a breather, due to significance of these resistances, but expected to keep bullish bias, due to positive fundamentals and improved technical picture on daily chart, as today’s acceleration broke above upper boundary of near-term bull-channel, while positive momentum continues to strengthen and daily Tenkan/Kijun-sen formed a bull cross.

Daily close above broken resistance at 1.3295 to validate fresh bullish signal, with potential dips to ideally hold above broken bull-channel upper boundary line (1.3263) and provide better buying levels.

Penetration of falling daily cloud to further strengthen bullish near-term structure for attack at 1.3360/70 zone (Fibo 76.4% / tops of Oct 24/28) and unmask cloud top (1.3432).

Res: 1.3370;; 1.3400; 1.3432; 1.3471
Sup: 1.3295; 1.3263; 1.3240; 1.3198