FTSE
Despite improving FTSE 100 sentiment, which has come from close to the 50,100 and 200 day average rates, and with futures subsequently posting 5 higher daily lows & highs in a row, a loss of topside momentum has left this week’s signals cautious and neutral. Tuesday’s trading reflected this caution, as although the trend of higher daily lows was ended, sentiment traded broadly sideways for a modest down-day.
However, it has left a bearish bias to signals, so with this in mind the outlook for Wednesday is to cautiously sell on the open and at 6775.0, with a stop loss at 6804.5, the March high trade.
Targets are to 6744.0, Thursday’s low, 6707.0, Wednesday’s base and then to 6663.0, the 29th April low trade.
The risk to this call is a move below 1.3883 indicating that buying pressure has reversed targeting 1.3855, the 13 day moving average.
EUR/GBP
The weakness of the rally in EUR/GBP from last week's low, highlighted in this week's report, was emphasised yesterday. As expected the Marabuzo line from Apr 29th and the 13 day moving average capped EURGBP and resulted in renewed selling yesterday.
This decline was still unable to effectively breach April’s lows or .8200 but despite being oversold it is likely that rallies will be temporary and limited.
So, our call is Bearish but to leave room to Sell a Rally to .8215. The risk is .8233, Mon’s top, with targets of .8191, .8174 then this year’s .8158 base. The risk is that selling pressure is weaker than currently assessed – signalled above .8233 towards .8259, last week's high point.
EUR/USD
Three days of indecisive trading ended with renewed demand for EUR/USD yesterday. Strong gains then took EUR/USD to the most bullish levels traded for 8 weeks – confirming the break of the trend of lower weekly highs. Overbought extremes led to a failure to hold the highs and consolidation in the latter part of the day and overnight but with the 13 day avg supporting and the Keltner channel trending positively.
Our call is Bullish but to leave room to Buy a Dip to 1.3905. The risk is 1.3883 and the immediate target is yesterday's 1.3951 top followed by 1.3967, this year’s peak, and towards 1.4018.