Cable bounces as price action ping pongs between key near-term levelspetar skakalov
Sterling gets a lift as EUR/GBP falls by 0.5% to 0.9050
The low for cable hit 1.2993 earlier and buyers defended the 1.3000 handle as well as the 200-hour MA (blue line) in general, before seeing price action bounce to 1.3050 levels.
This comes as EUR/GBP is sliding to a fresh session low of 0.9050 as price action there takes out both key hourly moving averages @ 0.9064-67 respectively, after hitting a near-term double top close to the 0.9100 handle.
The euro is looking rather vulnerable to start the week as the resurgence in virus cases across the region is putting increasing scrutiny on the economic recovery and that is weighing on regional assets as well as the single currency today.
Back to cable, the bounce is seeing price action now run into a test of its 100-hour MA (red line) @ 1.3054 and that should see sellers step in to defend the level.
The pound side of the equation hasn’t changed too much as Brexit talks continue to lead nowhere as negotiations are set to continue this week. Adding to that is the virus situation in the UK also not really faring much better in recent weeks as well.
The dollar has been keeping firmer amid the risk-off mood but has seen gains ease a little in the past hour or so. Despite the market focus on virus jitters again, the US election is coming up next week and it may be tough to settle on a firm conviction until then.
But all things being equal, it is tough to argue for another leg higher in cable – for now at least – given the gradual fading momentum since the pop on 21 October. Only a breach above 1.3100 will shift the momentum more towards buyers in a convincing manner.
Source: Technical analysis