Cable fell sharply in early hours of US trading on Monday, on news that UK foreign minister Boris Johnson resigned.
This was the second resignation from the cabinet today, as Brexit minister Davis quit earlier today.
Pound was initially little affected, as hopes on soft Brexit kept the currency underpinned, but fell around a hundred pips on news of Johnson’s resignation.
Today’s extension of larger recovery leg stalled at 1.3362, just under 1.3410 (daily cloud base), with falling and thickening daily cloud making strong pressure on the pair.
Fresh bearish acceleration cracked strong support at 1.3260 (daily Kijun-sen), turning near-term risk lower as recent news soured the sentiment.
Firm break lower would risk extension towards lower pivot at 1.3210 (broken Fibo 38.2% of 1.3472/1.3049 bear-leg, reinforced by rising daily Tenkan-sen) with sustained break here to generate initial signal of an end of recovery phase from 1.3049 (28 June low).
Slow stochastic is reversing from overbought territory on daily chart and supports the notion.
On the other side, a cluster of MA’s lays below the price and still underpins, with hopes of fresh upside expected to remain alive while the price holds above daily Kijun-sen.
Res: 1.3310; 1.3362; 1.3410; 1.3472
Sup: 1.3238; 1.3210; 1.3149; 1.3114
