Cable stands at the back foot on Monday and remains below 1.40 mark after losing around 1.5% in past two days.
Increased demand for dollar pushed sterling lower after bulls hit the highest level in almost three years (1.4238) last week.
Bulls are pausing after repeated failure to register clear break and weekly close above psychological 1.40 level that prompts traders to collect profits from the latest bullish acceleration and look for better levels to re-enter larger bullish market.
Deeper pullback is signaled by south-heading weekly stochastic, following reversal from overbought zone and strong upside rejection after the rally was capped by the top of falling monthly cloud.
Daily techs show rapid loss in bullish momentum that supports scenario.
Repeated daily close below 1.40 handle is needed to keep near-term structure weak (4-hr chart shows break below the cloud and rising negative momentum), but bears face headwinds from strong supports at 1.3902/1.3880 (50% retracement of 1.3565/1.4238 upleg / rising 20DMA) and may stay on hold in 1.3900/1.4000 zone, before fresh attempts lower.
Near-term action is expected to remain biased lower while holding below 1.40, however downside risk would fade on return and close above 1.40 and Friday’s high at 1.4030.
Res: 1.4000; 1.4030; 1.4079; 1.4100
Sup: 1.3902; 1.3880; 1.3822; 1.3800