Bulls lose traction on approach to the base of thick daily cloud
Bulls started to lose steam on Monday after last week’s nearly 1% advance, facing strong headwinds from the base of thick daily cloud (1.3760).
Although the price action is holding near the top of multi-day congestion, cable is lacking strength for eventual break higher.
Renewed concerns about the UK economic recovery on global threats from Delta variant spread and hopes that the Fed will start tapering in the near future, limit pound’s recovery, while traders focus US Aug payroll data for fresh signals.
Daily studies are bearishly aligned and add to weakening sentiment, but near-term bias is expected to stay in positive mode while the action holds above broken Fibo level at 1.3747 (38.2% of 1.3983/1.3601).
Expect initial bearish signal on close below 10DMA (1.3715) which would look for confirmation on extension below Friday’s low (1.3680).
Violation of daily cloud base would generate positive signal, but bulls need sustained break above 1.3800 (200DMA) to tighten grip.
Res: 1.3760; 1.3780; 1.3800; 1.3837
Sup: 1.3733; 1.3715; 1.3654; 1.3606