Recovery looks for retest of daily cloud top after being boosted by better than expected UK jobs data
Cable keeps positive tone in European trading on Tuesday after UK jobs data showed better than expected results.
Although the unemployment rose to the highest since Oct 2018 (4.1%, in line with expectations) small drop in employment and fall in jobless claims, improved overall picture.
The pound showed mild reaction after the parliament passed PM Johnson’s controversial plan which collides with existing Brexit treaty as well as international law.
The pair rose to the session high and pressuring 1.2900 barrier, following Monday’s first positive close after seven straight days in read.
However, recovery was rejected at first strong barrier at 1.2934 (daily cloud top / Fibo 23.6% of 1.3482/1.2762 fall) and firm break here is needed to confirm initial reversal signal.
Pound is dragged by stronger Euro, but rising negative momentum on daily chart is conflicting north-heading stochastic and RSI that may obstruct recovery.
Bullish scenario requires close above daily cloud for initial signal, which needs to be verified on lift above 1.3037 (Fibo 38.2% of 1.3482/1.2762/ falling 10DMA) that would open way for stronger correction.
On the other side, last week’s massive bearish candle (marks the worst week in six months) weighs heavily, with downside risk expected to persist as long as recovery remains capped by cloud top.
Res: 1.2934; 1.3000; 1.3037; 1.3053
Sup: 1.2867; 1.2814; 1.2762; 1.2732