Bears extended to new six-week low on Brexit turmoil but face headwinds from strong supports at 1.2900/1.2850 zone
Cable extends steep fall into sixth straight day on Wednesday, following 1.4% fall previous day (the biggest one-day drop since 21 Apr), pressured by Brexit turmoil, as fears about trade talks stall and no-deal Brexit scenario rise.
I addition, Britain is preparing the plan for life outside the EU, which would break international law and further sour trade talks.
Tuesday’s break and close below pivotal 1.30 support zone (Fibo 38.2% of 1.2251/1.3482 / psychological support / Aug monthly low), generated strong bearish signal.
Wednesday’s extension hit new low at 1.2919 (the lowest since 29 July), where weakness found a footstep (lower 20-d Bollinger band).
Bears cracked 200WMA (1.2929) and eye next strong supports at 1.2898 (rising 55DMA), 1.2866 (50% retracement of 1.2251/1.3482) and 1.2854 (top of rising and thickening daily cloud, break of which would spark fresh bearish acceleration and expose 200DMA (1.2737) and 1.2721 (Fibo 61.8%).
The pace and steepness of decline in past few days also sends negative signal, with Tuesday’s massive bearish daily candle weighing heavily and daily technical studies showing rising bearish momentum.
On the other side, deeply oversold daily stochastic and RSI in sideways mode after descend, warn that bulls may pause for consolidation.
Broken 1.30 support zone reverted to solid resistance which should ideally cap and maintain strong bearish bias, with extended upticks expected to stall under pivotal barriers at 1.3140/50 zone and keep bears in play.
Res: 1.3000; 1.3053; 1.3100; 1.3146
Sup: 1.2919; 1.2898; 1.2866; 1.2854