EUR/GBP
Against a background of negative signals for sentiment for this week, Tue’s minor decline in EUR/GBP was followed by more aggressive selling. This decline took EUR/GBP through the lower end of a declining Keltner channel and to within 4-pips of the 2013 low.
Prices are overstretched but with the underlying tone established it is now likely to profit taking will be temporary and limited. So our call is Bearish but to leave room to Sell a Rally to .8119.
The risk is .8136, yesterday's open, with an immediate target of .8081, the 2013 low, then .8056 and .8041. Another risk is that selling pressure is weaker than currently assessed – signalled above .8136 focusing on .8147.
GBP/JPY
Following 4 unchanged daily closes in a row at the GBP/JPY 50 & 100 day average rates, yesterday’s forecast was bearish. While this view was initially confirmed with a losses of ¾ Big Fig, the dip attracted buyers ahead of April’s 169.50 lows, for sentiment to rally by 1 ¾ Big Figs from the day’s 169.82 base.
This has resulted in an “outside day” (a lower low & a higher high) and with prices continuing to trade near the averages, a reflection of investor indecision. There is a bullish bias to signals, but until a daily bear trend is broken, the outlook for Thursday is to buy modestly on the open and then at 171.23, today’s low in Asia, with a stop loss at 170.63, yesterday’s opening trade.
Targets are to the bear trend at 171.95, 172.27, the 14th May high and then 172.75, last week’s top.
FTSE
This week’s FTSE 100 selling is forming a developing daily bear trend, and with a long sequence of higher weekly lows being ended, Wednesday’s forecast was for sentiment to continue to deteriorate. Contrary to this view however, investors bought the dip, sentiment recovering by 36 Pts on the day.
This is positive, and pullbacks should continue to attract buyers and the outlook for Thursday is to buy on the open and at 6810.0, with a stop loss at 6790.0.
Targets are to 6837.0, Tuesday’s high, 6852.5, this week’s top and then towards 6880.0, last week’s 14 year peak.