Cable jumped to 1.36 zone on Tuesday after pullback from new multi-month high at 1.3703 was rejected at 1.3451 on Monday and left hammer candle on daily chart, signaling possible end of corrective phase and reversal.
Drop through ascending 20 and 30 DMA’s and subsequent bounce and daily close above both moving averages on Monday, suggested that near-term bears ran out of steam.
Daily studies show sharp rise in bullish momentum that supports recovery, which has so far retraced 61.8% of 1.3703/1.3451 pullback, with today’s close above Fibo 61.8% level (1.3607) to add to positive signals.
Today’s strong recovery points to dip-buying scenario, but caution is highly required as worsening situation with new coronavirus outbreak in Britain and tough lockdowns may have more negative impact on pound.
Broken Fibo barrier at 1.3547 (38.2% of 1.3703/1.3451) marks pivotal support and close below here would weaken near-term structure and keep the downside vulnerable.
Res: 1.3607; 1.3644; 1.3670; 1.3703
Sup: 1.3577; 1.3547; 1.3526; 1.3503