GBP/USD
Our bullish call on GBP/USD yesterday was confirmed as Monday’s improvement not only continued, but accelerated.
This created a bullish weekly outlook, reached the first target and took CABLE to the top of the daily Keltner channel - the 1st time in almost 2 months.
The speed of the move means sentiment is overbought and, despite Asian consolidation, provides potential for profit taking. However, indications are that such setbacks are likely to be temporary.
So our call is Bullish from the open but also to Buy a Dip to 1.6726.
The risk is 1.6697 and the immediate target is 1.6769. A move above that level then targets 1.6794 or even towards this year’s 1.6823 high point.
EUR/GBP
Mon’s failure of EUR/GBP at the top of the Ichimoku Cloud proved important yesterday, as selling interest returned to the cross. The resulting strong decline- the most aggressive of this month – took EUR/GBP through the bottom of the Cloud and to the most negative levels for 5 weeks.
Intra-day signals for sentiment are oversold but rallies should now be temporary and limited and so our call is Cautiously Bearish below 0.8265. The immediate objective is 0.8215, 76% correction of this year’s rise, then 0.8204 and 0.8189.
The risk is above .8265 with further gains targeting .8278, the 13 day averageg, then .8285, this week's peak.
GBP/JPY
Last week’s GBP/JPY failed rally and the formation of a Shooting Star have left this week’s signals for GBP/JPY pointing lower. These are being confirmed with Tuesday’s losses posting a 3rd lower daily high and low in a row and a loss of just over 3 Big Figs since Thursday’s 173.16 high.
However, the bearish outlook is becoming increasingly cautious with prices trading towards 169.83, a 62% pull-back to the rally since last month’s low, which more importantly is close to the 100 day average rate.
The market has recovered from these levels in Asia this morning and, although there is no clear bullish reversal pattern, there is a positive bias.
FTSE
Bearish signals for FTSE 100 on the week and for yesterday have been confirmed. Investors sold futures on Tuesday to post a 2nd lower daily high and low in a row and a loss of 161 Pts since Friday’s high at 6653.5.
Although this is negative for sentiment, the pull-back is also signalled as being potentially temporary and a recovery into the close is positive. However, there is no clear bullish reversal pattern.
Signals for Wednesday are pointing to buying on the open and on the dip at 6517.0, the last 5 hour low, with a stop loss at 6492.5, yesterday’s base. Targets are to 6573.0, 6592.0 and then to 6620.0, this week’s top.
The outlook for Wednesday is cautiously positive above a stop loss at 170.01, yesterday’s low. Targets are to 171.21, yesterday’s open, 171.61, this week’s high and then towards 172.52, Friday’s top.