GBPUSD – it's dangerous to play against the trend but risk of pullback exists
Cable hit new high at 1.4328 on Thursday, in extension of previous day’s 1.7% rally, after pound rallied on weaker dollar.
Important barriers at 1.4288 (Fibo 76.4% of post-Brexit vote 1.5016/1.1930 fall) and 1.4317 (FE 200% of the wave C from 1.3301 trough) were cracked on today’s spike but gains were so far short-lived as the pair eased to 1.4232.
No firmer signs of correction so far, despite overextended daily studies, as steep bull-leg from 1.3457 (11 Jan trough), part of broader recovery rally from 1.1930, could extend further of strong bullish sentiment on positive Brexit talks environment; strong signals of strengthening UK economy and significantly weaker US dollar.
Bullish scenario sees firm break above 1.4317 Fibo barrier for extension towards next target at 1.4511 (FE 238.2%).
Conversely, stronger reversal signal requires return below 1.4200 handle and retracement of at least 50% of Wednesday’s 1.3996/1.4262 rally to expose strong supports at 1.4026/00 zone (rising daily Tenkan-sen / psychological support / Wednesday’s low), break of which would generate stronger bearish signal.
Res: 1.4317; 1.4328; 1.4350; 1.4400
Sup: 1.4232; 1.4200; 1.4163; 1.4124