Cable hit new 2021 high at 1.4249 on Tuesday, underpinned by growing optimism that booming UK housing market would contribute to a broader pick up in inflation and the subsequent reaction of the Bank of England, but gains were tempered by weaker than expected UK Manufacturing PMI in May.
Strong advance in May (cable was up 2.9% for the month) generated additional bullish signals on close above psychological 1.40 barrier (the first monthly close above since Jan 2018) and 100MMA at 1.4066 (the first close above the indicator since June 2014).
Fresh advance cracked the upper boundary of 1.4233/1.4091 range, generating an initial signal of bullish continuation which looks for confirmation on sustained break above former annual high at 1.4238 (posted in February), that would expose next key obstacles at 1.4299/1.4379 (50% retracement of 1.7189/1.1409/Apr 2018 high).
Bullish studies on larger timeframes support the notion, with corrective dips on overbought conditions expected to provide better buying opportunities.
Initial support lays at 1.4165 (10DMA) followed by more significant 1.41 zone (range floor, reinforced by 20DMA) which is expected to hold and keep larger bulls intact.
Res: 1.4238, 1.4249, 1.4299, 1.4379.
Sup: 1.4165, 1.4136, 1.4100, 1.4037.
