Cable eases from one-month high in European trading on Thursday after being inflated by fresh risk appetite on unclear signals from Fed that prompted investors out of dollar.
Although the Fed raised interest rates by 0.75% as expected, Chief Powell missed to deliver an information about the size of the next rate hike that made a number of traders to believe that the period of aggressive approach to policy tightening is likely over and the US central bank is going to start reducing the size of hikes.
The action is struggling at pivotal Fibo resistance at 1.2159 (61.8% of 1.2406/1.1760), despite Wednesday’s 1.07% rally and threatening of recovery stall here that would complete a bull-trap and increase downside risk.
Negative scenario, however, would require more evidence to be confirmed, with initial bearish signal expected on break of Fibo support at 1.2089 (23.6% of 1.1760/1.2191 recovery leg), with extension through key support at 1.2026 (Fibo 38.2% / daily Tenkan-sen to signal lower top at 1.2191 and reversal.
Conversely, sustained break of Fibo barrier at 1.2159 would strengthen near-term structure, but bulls would face more headwinds from the base of thick daily cloud (1.2235).
Res: 1.2191;1.2235; 1.2253; 1.2332.
Sup: 1.2089; 1.2000; 1.1976; 1.1925.
