Post-election trading shows initial signs that bulls might be running out of steam
Cable is holding positive tone in early Monday’s trading but post-election euphoria starts to fade.
The pair returns below 1.3400 handle in early European trading, on pullback from session high at 1.3422, with hourly studies being bearishly aligned and warning of further easing.
Strong post-election rally on Friday spiked to 1 ½ year high but was unable to hold gains and closed nearly two figures below new 1.3514 high.
Daily and weekly candles with long upper shadows are initial signs that bulls might be running out of steam.
Profit-taking after Friday’s surge contributes to fresh easing, with concerns about new government’s though job to be done in preparations for ending divorce process, expected to weigh on pound.
Bullish signals on close above 200WMA and penetration of monthly Ichimoku cloud are supportive factors, conflicted with bearish divergence on daily stochastic and fading momentum and sideways-moving stochastic/RSI on weekly chart.
Cautious dip-buying remains favored on expectations that sterling would maintain strong bullish sentiment, with extended pullback below 1.3305 (last Friday’s post-election correction low) needed to stay above rising daily Tenkan-sen (1.3248) to keep bulls in play.
On the other side, bullish bias might further fade on loss of 1.3248 support that would expose next pivotal support at 1.3149 (daily Kijun-sen).
Res: 1.3400; 1.3422; 1.3446; 1.3472
Sup: 1.3336; 1.3305; 1.3248; 1.3227