Cable remains within choppy directionless mode which extends into sixth straight day on Friday, signaled by multiple long-legged Dojis.
Initial negative signal was generated on eventual close below 200SMA on Wednesday after recovery attempts were capped by falling 10SMA and pound was hurt by softer than expected tone from BoE.
Governor Carney said that he expects rate rise over next year if there are no shocks to the economy.
The pair moved closer to the range floor, turning near-term bias negative, but still unable to break lower and signal continuation of larger downtrend from 1.4376 (post-Brexit recovery high).
Bullishly aligned momentum and slow stochastic conflict MA’s in bearish mode, suggesting further sideways trading.
Cable is on track for weekly close in Doji after strong fall in past three week’s which adds to signals of extended consolidation, also signaling that strong three-week fall might be running out of steam.
However, weekly close below 200SMA would be negative signal which could be reinforced by formation of 10/200SMA death cross (falling 10 SMA is approaching 200SMA) and keep the downside at risk.
Firm break below recent range floor would risk test of 1.3442 (Fibo 38.2% of 1.1930/1.4376 recovery phase) and extension towards 1.3230 (weekly cloud top).
Bullish scenario requires lift and close above 200 and 10SMA’s to ease bearish pressure and signal recovery.
Res: 1.3544, 1.3573, 1.3617, 1.3676
Sup: 1.3500, 1.3484, 1.3460, 1.3442
