Fresh weakness is on track to fully retrace post-election rally
Cable accelerated lower in early European trading on Tuesday, following PM Johnson’s decision to limit post-Brexit transition period by the end of 2020.
Near-term sentiment soured further as fresh weakness is on track to fully retrace last Friday’s rally after election results were announced.
Repeated strong upside rejections on Fri/Mon and early Tuesday’s trading in red, signal formation of reversal pattern on daily chart.
It seems that 1.3514 (post-election peak) would remain the highest level in 2019, on signals that larger short squeeze might be over, as traders may go for more aggressive profit-taking.
Daily indicators are heading south and support scenario as fresh weakness cracked initial support at 1.3189 (10DMA) and eye next pivot at 1.3150 (last Thursday’s low / 20DMA), loss of which would expose 200WMA (1.3090).
UK jobs data are in focus today and may further pressure sterling on negative results.
Earnings are forecasted lower (Oct 3.4% f/c vs 3.6% prev) while jobless claims are expected to drop (Nov 21.2K vs 33K prev).
Res: 1.3282; 1.3339; 1.3400; 1.3422
Sup: 1.3161; 1.3100; 1.3150; 1.3090