GBP/USD
In line with our bearish call for yesterday and this week, the background to CABLE trading remains last week's Bearish Inverted Hammer pattern. Monday’s rally proved limited – unable to close above the 13 day avg and failing at Friday’s Marabuzo line.
The subsequent renewal of selling pressure produced a 4th down day from the last 5 and although oversold extremes have produced profit taking in Asia we currently look for such bounces to be limited.
So our call is Bearish but to leave room to Sell a Rally to 1.6892. The risk is 1.6910 with an immediate target of 1.6841 then yesterday's 1.6819 base and 1.6793.
The risk is that selling pressure is weaker than currently assessed – signalled above 1.6910 focusing on Friday’s 1.6938 top.
EUR/GBP
The ‘hugging’ of the bottom of a negative Keltner channel continues as selling pressure on EUR/GBP yesterday yielded a 4th down day in a row. This move confirmed our weekly forecast, reaching the first target, and the lowest levels traded since Jan 2013.
The scope of these moves means sentiment is oversold – providing potential for profit taking – but as yesterday's price action proved, rallies are currently attractive to sellers.
So our call is Bearish but to leave room to Sell a Rally to 0.8156. The risk is 0.8174 with an immediate target of 0.8124 then 0.8102 or even 0.8081, the 2013 bottom.
The risk is that selling pressure is weaker than currently assessed – signalled above yesterday's 0.8174 top focusing on 0.8190.
USDJPY
Bullish signals for USD/JPY on the week and for yesterday have been confirmed, investors buying the market on Tuesday to post a 4th higher daily low in a row and a gain of ¼ Big Fig on the day.
However, the analysis has also highlighted that the rally could be corrective, and it has stalled from close to 102.41, a 62% recovery to May’s losses. There has been some weakness in Asia this morning and although there is no clear bearish reversal pattern, the outlook for Wednesday is cautiously negative below a stop loss at 102.41.
Targets are ton 101.76, this week’s low, 101.55, Friday’s base and then 101.42/46, May’s low trades.