Price continues to hold below the 100-hour moving average
Friday's trading saw price try to break above the 100-hour MA (red line) as buyers bid up the pair in an attempt to establish a near-term bullish bias. But further resistance at the 23.6 retracement level @ 1.2872 helped to limit further gains in the pair and now price has been struggling to break back above the 100-hour MA in trading today.
Given that, near-term bias remains undefined as price continues to sit between the two key hourly moving averages. As UK traders are enjoying the long weekend, price action may still be tepid and I'd be wary of any near-term breaks as it may not reflect the market's real conviction/positioning.
The interesting thing about this is there are reasons to be bullish and bearish in the pair moving forward.
The bearish factor remains Brexit and the continued talk of a no-deal Brexit outcome. The uncertainty in that and potential delay in Brexit negotiations with the EU - being dragged to November/December - makes for uneasy times for UK investors and presents a big unknown for traders. And as traders, we hate uncertainty more than anything else.
As for the bullish factor, the weekly chart shows a morning star pattern formed and that presents a good argument from a technical perspective that last week's bounce may still have a bit more room to run:
But regardless of technical levels and patterns, the ultimate driver will be Brexit headlines and how things develop. That highlights that downside risks in the pair remains the more prevalent side but that doesn't rule out a further squeeze to the upside in the meantime.
