Cable is consolidating after 2.5% weekly fall and failure to clear 1.30 level but remains biased lower
Cable ticks higher in early Monday’s trading after double failure to close below cracked psychological 1.30 support last Thu/Fri.
The pair suffered the biggest weekly loss in past three years last week, being down 2.5% for the week, following post-election rally’s stall and subsequent reversal.
Pound lost traction after initial optimism on Tory’s election victory faded as PM Johnson took the hard line in Brexit finalization, limiting transition period until the end of 2020 that increased concerns of hard Brexit in the market and soured the sentiment.
Profit-taking after four-month advance, which stretched for few big figures after UK election, added to negative near-term outlook.
Repeated failure at 1.30 handle and last Friday’s Doji, signal that fresh bears face strong headwinds and may hold in extended consolidation before renewed attack at 1.30 level as massive weekly bearish candle weighs heavily and daily studies weakened (10/20DMA’s turn south and falling momentum reached the border of negative territory.
Deeply oversold stochastic supports consolidation scenario, with initial barriers at 1.3075/79 (20DMA / Friday’s high) and extended upticks to be capped by falling 10 DMA (1.3140) to keep bearish bias.
Eventual clear break of 1.30 support would open way towards next pivotal supports at 1.2919/08 (Fibo 38.2% of 1.1958/1.3514 / rising 55DMA).
Pre-holiday lower volumes may keep near-term action in tighter ranges.
Res: 1.3032; 1.3079; 1.3140; 1.3168
Sup: 1.3000; 1.2988; 1.2978; 1.2919