Post-BoE negative sentiment remains in play despite upbeat UK retail sales
Cable extends weakness on Friday after recovery attempt on much better than expected UK retail sales were short-lived.
Near-term sentiment remains weak as Bank of England’s decision to increase QE program by 100 billion pounds and hints of slowing down its assets purchases, fueled Thursday’s nearly 1% fall.
Friday’s action is weighed by long bearish candle of the previous day and close below 1.2443 support (50% retracement of 1.2074/1.2813) and fresh push lower is now pressuring key Fibo support at 1.2356 (Fibo 61.8%) after taking out converged 30/55DMA’s (1.2413).
Rising bearish momentum on daily chart supports scenario, as thinning daily cloud attract (the cloud narrows but will start to thicken and continue lower next week)
The pair is on track for the second weekly bearish close, with long upper shadow on weekly candle, adding to negative signals.
Close below Fibo 61.8% support (1.2356) is needed to confirm bearish stance and unmask next support at 1.2245 (Fibo 76.4% of 1.2074/1.2813 bull-leg).
Daily Kijun-sen (1.2443) is expected to cap today’s action and keep bears intact.
Res: 1.2443; 1.2507; 1.2530; 1.2566
Sup: 1.2356; 1.2332; 1.2304; 1.2245