Cable extends recovery from Monday’s low (1.2353) into second straight day, after receiving fresh boost from higher than expected UK inflation data for March, which added to expectations for 25 basis points BOE rate hike in May.
Fresh bulls rose above daily Tenkan-sen (1.2444) and hit Fibo 61.8% retracement of two-day 1.2545/1.2353 pullback (1.2472), adding to initial bullish signal from Tuesday’s bullish engulfing pattern.
The signal still requires verification on daily close above Tenkan-sen, as a minimum requirement to reinforce near-term bullish structure and signal higher low at 1.2353 (Apr 17) and end of corrective phase.
Further advance would also signal a double bottom at 1.2343/53 (Apr 10/17) and add to upside prospect for retest of 2023 high at 1.2545 (Apr 14).
On the other hand, weakening positive momentum on overall bullish daily chart studies, warns that bulls may face headwinds.
Also, next week’s twist of daily Ichimoku cloud might be magnetic and obstruct recovery.
The downside is expected to remain vulnerable while daily Tenkan-sen limits recovery, although slight bullish bias still seen while the action holds above rising 20DMA (1.2392).
Look for clearer direction signals.
Res: 1.2444; 1.2472; 1.2500; 1.2525.
Sup: 1.2392; 1.2370; 1.2343; 1.2274.
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