Recovery needs clear break above 1.3137 Fibo barrier to resume and neutralize risk of stall
Cable maintains positive tone on Monday and extends recovery from strong downside rejection at 1.2900 zone last week, after pullback from post-election high at 1.3514 was contained rising 55DMA and failed to clearly break below Fibo 38.2% of 1.1958/1.3514 rally, also running out of steam just above rising thick daily cloud.
Thin holiday market and weak dollar help pound’s recovery, boosted by comment from the president of European Commission who said that the EU may need to extend the deadline for Brexit talks.
Fresh bulls pressure pivotal Fibo barrier at 1.3137 (38.2% of 1.3514/1.2904 pullback) break of which is needed to signal further recovery.
Flat daily momentum and formation of daily Tenkan-sen/Kijun-sen bear-cross warn that recovery may face strong headwinds, with risk of stall on repeated daily close below 1.3137 Fibo barrier.
However, near-term action is expected to remain biased higher while holding above 10DMA (1.3060), but break and close below would increase risk of further weakness and test of psychological 1.30 support.
Larger picture shows the uptrend from 1.1958 (3 Sep low) intact that keeps the overall picture bullish while the price action holds above key supports at 1.2900 zone and trendline support at 1.2825.
On the other side, strong rejection on thick monthly cloud base (1.3337) and failure to clearly break pivotal Fibo barrier at 1.3452 (61.8% of 1.4376/1.1958) keeps the downside vulnerable.
Res: 1.3125; 1.3137; 1.3168; 1.3209
Sup: 1.3060; 1.3032; 1.3000; 1.2954