Bulls continue to pressure 2021 high but negative fundamentals produce strong headwinds
Cable remains constructive and holding near new 2021 high on Thursday, after the action on Wednesday stalled on approach to key barrier at 1.3703.
Daily moving averages remain in bullish setup but loss of positive momentum and stochastic entering overbought territory, warn that bulls may be running out of steam.
Fundamentals are not working in favor of sterling as tighter lockdowns on severe coronavirus situation in Britain and emerging Brexit-related problems could produce strong headwinds for bulls.
Repeated to clearly break Jan 4 high (1.3703) would signal further extension of near-term range-trade, but would also keep the downside vulnerable.
Initial negative signal can be expected on loss of 10DMA support (1.3603) while extension and close below 20DMA (1.3554) would soften near-term structure and risk test of pivotal support at 1.3451 (Jan 11 correction low).
Alternatively, sustained break above 1.3703 would generate initial signal of bullish continuation and shift focus higher.
Res: 1.3680; 1.3703; 1.3763; 1.3800
Sup: 1.3616; 1.3603; 1.3554; 1.3503