Cable is moving in directionless and narrow-range mode in early European trading on Thursday, awaiting ECB’s decision which would influence pair’s near-term action.
Sterling stands at the back foot following triple-failure to clear Fibo barrier at 1.2370 (50% retracement of 1.2783/1.1958), but remains within daily cloud, as cloud base (1.2304), reinforced by broken 55DMA, keeps the downside protected for now.
Wednesday’s bearish close formed bearish engulfing pattern, initial negative signal which needs confirmation on today’s close.
Fading bullish momentum and daily stochastic reversing from overbought territory, add to negative signals, however, sterling is likely to follow the Euro after ECB.
Initial bearish signal could be expected on break below daily cloud base, for test of rising 10DMA (1.2251) and initial reversal signal expected on break and close below 1.2221 (Fibo 38.2% of 1.1958/1.2384, reinforced by rising 20DMA).
Conversely, bulls are expected to re-take control on lift above 1.2370/84 (Fibo barrier/Monday’s high) that would expose upper pivot at 1.2431 (daily cloud top).
Res: 1.2342, 1.2370, 1.2384, 1.2431
Sup: 1.2304, 1.2283, 1.2251, 1.2221
