Ongoing Brexit uncertainty, on top of a potential extension to the transition period, undermined the British pound on Monday, consequently pressuring cable back under its 1.30 mark. In terms of H4 technicals, further downside may very well be in store with space seen to press lower towards Quasimodo support located at 1.2941, shadowed closely by September’s opening level at 1.2911 and then the 1.29 handle. It may also interest some traders the RSI is seen crossing swords with its oversold value.
Along the same vein, weekly price also echoes a somewhat bearish vibe from supply at 1.3472-1.3204, targeting demand at 1.2589-1.2814. In addition to this, the market also witnessed a firm break of daily trend line support (extended from the low 1.2661), with potential to drive as far south as support at 1.2804 (housed within the upper limit of weekly demand at 1.2589-1.2814).
Areas of consideration:
Having seen all three timeframes strike a bearish tone, along with H4 price yet to touch base with its next key level of support: 1.2941, today’s spotlight will mostly be driven toward shorts.
A retest of 1.30 (black arrows) holding by way of a bearish candlestick formation from either H4 or H1 (stop/entry parameters can be applied according to the selected candlestick structure) is, given the overall technical picture, likely considered a high-probability selling opportunity. A key point to keep in mind is although the first take-profit targets are reasonably close on the H4 timeframe (1.2941/1.2911/1.29), as we expand to the higher timeframes, the ultimate take-profit target falls in at the top edge of weekly demand mentioned above at 1.2814. That’s nearly 200 pips from 1.30!
Today’s data points: MPC member Haldane; BoE Gov. Carney and FOMC member Bostic all scheduled to speak.
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