Recovery lost steam but bias remains with bulls above broken 200DMA
Cable eased on Friday after strong rally in past two days failed to clear pivotal barrier at 1.3780 (falling 10DMA / Fibo 61.8% of 1.3910/1.3571 downleg).
Conflicting signals from solid economic indicators and fears of stronger spread of the Delta variant of coronavirus, keep the pound without clear direction, with mixed technical studies contributing.
This week’s break above 200DMA (also Fibo 38.2% of 1.3910/1.3571) was strong bullish signal, which was partially offset by failure to resume recovery through next important barriers (10/20DMA’s).
Current easing so far looks like positioning for fresh push higher, with near-term action required to remain above broken 200DMA to keep bullish bias.
Formation of long-tailed Hammer candle on weekly chart adds to positive signals.
On the other side, rising negative momentum on daily and weekly chart warns of recovery stall.
Look for clearer direction signals on break of either 200DMA (1.3705) of 20DMA (1.3795).
Res: 1.3766; 1.3780; 1.3795; 1.3830
Sup: 1.3719; 1.3705; 1.3651; 1.3591