Cable edges higher following Wednesday’s post-US election 1.1% drop, generating an initial signal of recovery, after bears repeatedly experienced strong downside rejection.
Double failure to register clear break of Fibo support at 1.2846 (76.4% of 1.2664/1.3434) points to formation of a double-bottom pattern (1.2843/34) as nearby 200DMA (1.2813) also produced headwinds to bears.
However, more work at the upside is still required to verify recovery signals, with primary target at 1.2940 (dally Tenkan-sen) and more significant psychological 1.30 barrier and the base of thick daily cloud (1.2949) where extended upticks would be capped.
Bearishly aligned daily technical studies (negative momentum/price action weighed by thick daily cloud) favor scenario of limited correction /prolonged consolidation, before larger bears resume.
On the other hand, fundamentals are likely to play a key role today as Bank of England will deliver its rate decision.
A 25 basis points cut to 4.75% is widely expected, with focus BoE’s narrative being a key. Hawkish cut to probably inflate Pound, although stronger rally is still seen as limited, as pressure from stronger dollar on new US political outlook is likely to persist.
Firm break of 1.2843/34 double-bottom (reinforced by 200WMA) and 1.2813 (200DMA) to generate signal of bearish continuation.
Res: 1.2940; 1.2979; 1.3000; 1.3049.
Sup: 1.2872; 1.2834; 1.2813; 1.2765.
