Cable stands at the back foot in early Monday’s trading and pressures initial support at 1.3100 after strong rally on Friday failed to regain last week’s 1.3158 high (the heist since Sep 2016).
Deeper pullback signaled by bearish divergence on slow stochastic, as well as IMF report saying sterling is 15% overvalued.
Dips may test support at 1.3072 (Fibo 38.2% of 1.2932/1.3158 upleg) and extend to 1.3050 (50% retracement / daily Tenkan-sen / 10SMA) before broader bulls resume. Sustained break above 1.3158 to open round-figure barrier at 1.3200 and Fibo 138.2% projection at 1.3222.
Weekly close above 1.3109 (Fibo 38.2% of 1.5016/1.1930 fall) on Friday was a bullish signal for extension of recovery rally from post-Brexit lows at 1.2000 zone, where the base has been formed.
Res: 1.3134, 1.3158, 1.3200, 1.3222
Sup: 1.3100, 1.3072, 1.3050, 1.3018
