Cable hit new two-month low at 1.2914 on Wednesday, in extension of previous day’s strong fall, mainly driven by rallying dollar and soured sentiment on no substantial changes in stalled Brexit talks.
Tuesday’s break and close below key supports provided by converging 200 / 100SMA’s at 1.2965/57 respectively (200SMA kept the downside attempts limited since 19 Feb) was strong bearish signal.
Bears eye key Fibo support at 1.2889 (50% retracement of 1.2397/1.3381 ascend), violation of which would risk extension towards next key level at 1.2773 (14 Feb trough / Fibo 61.8% of 1.2397/1.3381).
Meanwhile, deeply oversold stochastic suggest that bears may pause ahead of 1.2889 target and bounce, in positioning for fresh push lower.
Broken 200SMA (reinforced by formation of 5/200SMA bear-cross) should ideally cap upticks, but stronger recovery towards daily cloud base (1.3024) cannot be ruled out.