Recovery from new multi-month low at 1.2605 is running out of steam as attempts to extend higher, stalled at 1.2947 in early Asian trading on Monday, unable to break above Fibo 23.6% of 1.3179/1.2605/falling 10 SMA (1.2940/41). Bulls are losing traction despite formation of Doji reversal pattern on daily chart as overall outlook remains negative over no-deal Brexit fears and political turmoil in the UK. Daily studies are in bearish mode and current action was seen as positioning for fresh weakness, however, extended consolidation above 1.2600 zone, which proves to be solid support, may extend. Victory of Brexit party in the EU election and defeat of main Conservative and Labor parties shows that the UK is strongly divided over Brexit. Resignation of PM May and battle of candidates for the leadership, adds to political uncertainty that weighs on starling and may limit recovery. Near-term outlook is expected to remain negative while falling 10SMA caps, with extension and close below 5SMA (1.2685) to risk retest of 1.26 zone. Only close above 10SMA would keep in play hopes for further recovery and possible test of next pivotal barrier at 1.2824 (Fibo 38.2% of 1.3179/1.2605).
Res: 1.2740, 1.2763, 1.2810, 1.2824
Sup: 1.2685, 1.2647, 1.2605, 1.2580
