GBPUSD Outlook: Bears are taking a breather before attacking key supports as politics/bearish techs weigh

GBPUSD

Cable hit new three-week low at 1.2936 in early European trading on Tuesday, in extension of Tuesday's 0.9% fall (the biggest daily loss in October). Politics remain pound's key driver, as reports suggest that Brexit talks stalled, and UK PM May faces strong opposition in her own party over her Brexit plan, which further weakens her position. Pound's strong negative sentiment is reinforced by bearish daily / weekly techs, as daily MA's turned to bearish setup and momentum studies point lower. Monday's close below 55SMA (1.2992) was bearish signal, with long red daily candle also weighing. Bears probed below daily cloud base (1.2944) on Tuesday, with firm break lower to generate negative signal, which would be confirmed by extension and close below pivots at 1.2921 (03/04 Oct lows) and 1.2904 (Fibo 61.8% of 1.2661/1.3297 rally). The action in past week was entrenched within steep bear-channel, which shows intention to extend lower. Sustained break below 1.2904 would also complete failure swing pattern on daily chart, which would trigger fresh weakness and also signal an end of corrective phase from 1.2661 (15 Aug low). Meanwhile, the pair is holding within narrow consolidation in early Tuesday's trading, with oversold slow stochastic warning of stronger correction. Broken 55SMA (1.2992) and daily cloud top (1.3012) mark initial resistances, with extended upticks to be capped by broken 100SMA (1.3080). Only break and close above 10SMA (1.3102) would neutralize bearish bias.

Res: 1.2992; 1.3012; 1.3054; 1.3080
Sup: 1.2936; 1.2921; 1.2904; 1.2811

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