Cable consolidates in early Wednesday’s trading after 1.08% rally on Tuesday (the biggest one-day gains since 1 Nov).
Tuesday’s surge after strong UK jobs data resulted in break and close well above converged 20/200SMA’s, as well close above 1.3047 (Fibo 61.8% of 1.3217/1.2772), generating strong bullish signal.
Bulls turn focus towards key barrier at 1.3217 (2019 high, posted on 25 Jan), but may undergo consolidative / corrective action before continuing, as daily stochastic is overbought and momentum is turning lower.
Strong 1.30 support zone (broken 20/200SMA’s / psychological) is expected to hold and keep bulls intact for fresh extension higher, with repeated close above Fibo barrier at 1.3047 to confirm bullish stance and open way towards initial barriers at 1.3112 (Fibo 76.4% of 1.3217/1.2772) and 1.3160 (31 Jan lower high) en-route to 1.3217 target.
Caution on return and close below 20/200SMA that would risk deeper pullback, as 25 Feb daily cloud twist would be magnetic.
Markets will also focus on the outcome of today’s meeting of UK PM May with EU Commission chief Juncker.
Positive news would offers fresh support to sterling while another failure of Theresa May’s attempts to save her Brexit plan would increase pressure on pound.
Res: 1.3047; 1.3076; 1.3112; 1.3160
Sup: 1.3031; 1.3004; 1.2995; 1.2942
