EUR/GBP
In line with our bearish call on EUR/GBP, yesterday saw the top of the daily Ichimoku Cloud and the 13/100 day averages cap EURGBP. Net downside was limited – unable to reverse half of the preceding day’s gains – but the decline from above 0.8300 reflects the weekly bias. Allowing for volatility, we look for the downside to develop.
In view of this, our call is Bearish but to leave room to Sell a rally to 0.8282, the overnight high. The risk is 0.8302 with an immediate target of 0.8253, Monday’s base, then 0.8246 and .8232.
The risk is that selling pressure is weaker than currently signalled above 0.8302 to 0.8322.
EUR/USD
In line with our bearish call for EUR/USD sentiment, the sequence of three up days ended yesterday. For a third day in succession, sellers were attracted by levels beyond the 13 day average. Net losses were not extensive but enough to reverse the preceding day’s entire upside and have been extended in Asia.
The proximity of the 10 day average and the Cloud pattern means signals cannot be strong but Sentiment is assessed as negative. So, allowing for a reaction to Asian downside, our call is Bearish and to Sell a Rally to 1.3777.
The risk is 1.3802 with an immediate target of 1.3725, this week's bottom. A move through that point focuses on 1.3705, last week's base and towards 1.3664, a 62% correction point.
FTSE
Bullish signals on the week and for yesterday have been confirmed, investors buying FTSE 100 on Wednesday enjoyed a modest 21 ½ point gain. A daily Spring Hammer at last month’s low has pointed signals higher and this week’s improvement has ended a sequence of lower weekly highs, which is positive for sentiment.
With no sign yet that demand to buy dips is ending, the outlook for Thursday is to buy on the open and at 6594.0, yesterday’s afternoon low, with a stop loss at 6572.0, a 50% pullback to this week’s gains.
Targets are to 6621.5, yesterday’s high, 6643.0, the 2 week top on Jun and then towards 6700.0, the same high trade on the Mar contract.
EUROSTOXX
Against a background of bullish signals for DJ Euro Stoxx 50 on the week, yesterday’s outlook remained positive. Although a sequence of higher daily lows was extended to 7, sentiment traded sideways inside a small 16 point range for an unchanged close.