Confluence resistance stands at 1.3450/94 where the 2017 high-week reversal close and the 52-week moving average converge on the 50-line of the downslope. A weekly close above this threshold would be needed to suggest a more significant low is in place with such a scenario targeting the 2016 high-week reversal close (Brexit) at 1.3675.
Bottom line: Sterling is testing downtrend support and the immediate short-bias remains at risk near-term while above 1.3182. From a trading standpoint, a final washout into this region may offer an opportunity to fade a portion of this decline. That said, the broader outlook does remain weighted to the downside while within this formation and a larger correction here could offer more favorable short-entries in the weeks ahead. A break lower would invalidate the rebound play with subsequent support objectives at eyed at 1.3036 and the 61.8% retracement at the 1.29-handle. For now, the immediate focus is on a break of the 1.3182-1.3494 zone for guidance as price carves out the June opening range.
