Cable consolidates under new multi-month high
Cable stands at the front foot in early European session on Thursday and returned above 1.33 handle after pulling back from new multi-month high at 1.3381, posted after strong rally on Wednesday (the pair was up 1.8% for the day, the biggest one-day rally since 24 Jan 2018).
Sentiment remains positive after UK parliament voted down scenario of Britain’s exit from the EU without withdrawal agreement and rising optimism that PM May’s plan might be approved on the parliament’s third vote, expected before EU summit on 21 Mar, inflates pound (Goldman Sachs raises probability of divorce deal being approved to 60%).
Wednesday’s probe above former high at 1.3349 marked full retracement of 1.3349/1.2960 pullback, but failure to close above signals that bulls look for consolidation before fresh push higher.
Sustained break above 1.3381 high and 1.3386 Fibo barrier (50% of 1.4376/1.2397) would open way towards 1.3472 (3 Jun 2018 high) and would expose key barrier at 1.3620 (Fibo 61.8% of 1.4376/1.2397).
Daily momentum and stochastic are turning south and form bearish divergence that could trigger corrective action.
Overnight’s dip stalled on approach to pivotal support at 1.3220 (Fibo 38.2% of 1.2960/1.3381 upleg) which is required to hold and keep bulls intact, as Wednesday’s long bullish daily candle underpins.
Only return below 1.3170 (10SMA / 50% retracement) would sideline bulls and risk further easing.
Res: 1.3330; 1.3349; 1.3381; 1.3472
Sup: 1.3281; 1.3239; 1.3220; 1.3170