GBP/USD
CABLE was bought at higher levels for a 6th week in a row last week and reached the highest point traded since 2009 – marginally short of 1.7000. The resulting setback was a sharp one however and the market corrected overbought extremes.
Although the move is expected to be temporary profit taking, the break of the 13 day avg and the production of a weekly Bearish Inverted Hammer pattern mean that the outlook for the coming days is temporarily Bearish but to leave room to Sell a Rally to 1.6938, Friday’s top.
The risk is 1.6996 with targets of 1.6793, 1.6728, the open from 4 weeks ago, or even 1.6660. The risk is that selling pressure is weaker than currently assessed – signalled above 1.6996, last week's top, focusing on 1.7043, the 2009 high point.
EUR/GBP
As expected selling pressure continued in EUR/GBP and yielded a 3rd down week from the last four. The move also took the cross near to this year’s low and the 62% correction of the 2012-13 rise.
Overcoming a midweek rally that was capped by a daily Marabuzo line and the 13 day moving average, the focus is clearly on the downside, especially with the Keltner channel increasingly negative.
So, allowing for temporary profit taking our call is Bearish but to leave room to Sell a Rally to .8190, Thu’s Marabuzo line. The risk is .8224 with an immediate target of .8136 then .8081, last year’s base, and .8053.
The risk is that selling pressure is weaker than currently assessed – signalled above last week's .8224 open focusing on .8260.
FTSE
Q2 signals to buy FTSE 100 on the dip have been confirmed, but with divergence on momentum at close to 14 year highs a warning to bulls, last week’s signals turned to temporarily bearish. Although sentiment closed little changed on the week, signals are very similar this week.
With this in mind the outlook is to sell on the open and at 6825.0, with a stop loss at 6861.5, last May’s 14 year peak. Targets are to 6766.0, Thursday’s low, 6734.5, last week’s base and then towards 6663.0, the 29th April low trade.