Bulls are taking a breather after impressive rally and awaiting fresh signals
Sterling eases from one-week highs in early Thursday as traders booked profits after Wednesday’s 1.44% advance (the biggest one-day gains since 13 Mar).
Strong rally on renewed optimism on avoiding hard Brexit emerged after unsuccessful probe below critical 1.20 support zone and temporarily neutralized downside threats.
The latest vote of UK parliament on Wednesday resulted in blocking no-deal Brexit scenario, with possibilities of snap elections in mid-October and another Brexit delay, being now on the table.
Recovery rally in Tue/Wed seems to be running out of steam after impressive advance and close above bear-trendline drawn off early May high at 1.3179 (currently at 1.2224), as fresh election uncertainty weighs and for now caps the action.
Fading bullish momentum on daily chart and reversal lower of 4-hr chart indicators, adds to signals of pullback.
Broken bear-trendline was cracked but holding dips for now, with firm break lower to open a series of supports, provided by daily MA’s at 1.2195 (10DMA); 1.2161 (30DMA) and 1.2152 (20DMA) which guard pivotal support at 1.2144 (Fibo 38.2% of 1.1958/1.2259), loss of which would spark deeper pullback and mark tops at 1.2256/59 (Wed / today).
Otherwise, dips will be seen as positioning for further advance and test of key barrier at 1.2309 (27 Aug high) while dips remain contained by these supports.
Res: 1.2259; 1.2273; 1.2290; 1.2309
Sup: 1.2224; 1.2195; 1.2161; 1.2144