Mixed signals keep near-term action without clear direction
Cable bounced to new daily high at 1.3286 after weaker than expected US Manufacturing / Personal Income data pressured greenback.
Fresh strength prevented the pair from deeper pullback after larger bulls stalled at 1.3349 on Wednesday and Thursday’s action ended in red.
Today’s extension lower found footstep at 1.3218 (near rising 5SMA and Fibo 23.6% of 1.2772/1.3349 rally).
Strong bullish momentum and daily MA’s in full bullish setup support scenario for limited pullback before bulls resume towards 1.3386 Fibo target, however, overbought stochastic contradicts positive signals and keeps the downside vulnerable.
Fading optimism over reduced risk of no-deal Brexit could also spark further profit-taking and add to existing bearish threats.
Return and close below 1.3218 zone would generate initial bearish signal, extension below 1.3129 pivot (rising 10SMA / Fibo 38.2% of 1.2772/1.3349) is needed to signal reversal and open way for further easing.
On the other side, positive signal comes from the second straight bullish weekly close, but close in the weekly cloud (cloud base lays at 1.3265) is needed to confirm and re-expose 1.3349 high (the highest since 6 July 2018).
Res: 1.3286; 1.3319; 1.3349; 1.3386
Sup: 1.3235; 1.3213; 1.3129; 1.3061