FTSE
Investors sold FTSE 100 on Tuesday, sentiment posting a 3rd lower daily low in a row and a loss of 50 Pts on the day. A sequence of higher weekly lows has been ended, turning this week’s signals to bearish and with no sign yet that the pullback is ending, the outlook for Wednesday is to sell on the open and at 6810.0, with a stop loss at 6837.0, yesterday’s high.
Targets are to 6762.5, yesterday’s low, 6734.5, May’s base and then 6700.0.
GBP/USD
Monday’s indecisive price action in GBP/USD was actually followed by fresh investor demand. This improvement resulted in a 3rd up day from the last 4, and a more serious test of the key 13 day moving average. Although prices beyond that point were rejected – halving initial upside – sentiment is left mildly positive although an early move beyond the avg is looked for as confirmation.
So, our call is Bullish but to leave room to Buy a Dip to 1.6820. The risk is 1.6791, Friday’s open, with targets of 1.6866, yesterday's top, 1.6892, May 9th Marabuzo line, and towards 1.6933.
The risk to this call is a move below 1.6791 indicating that buying pressure has stalled and reversed targeting 1.6766, last Thu’s open.
GBPCHF
Bullish signals for GBP/CHF on the week have been confirmed with Tuesday’s trading posting a 4th higher daily low in a row and an initial gain of over ½ Big Fig. However, the rally has been sold from close to January’s 17 month high at 1.5126, for sentiment to give up virtually all of the gains, in the process forming a daily Shooting Star. Although this is negative and highlights topside exhaustion, the trend of higher daily lows remains intact.
With this in mind, the outlook for Wednesday is to stay square on the open, but to sell the rally at 1.5090 with a stop loss at 1.5126, January’s 17 month high, or to sell down through 1.4980, this week’s low with a stop loss at 1.5020.
Targets below 1.4980 are to 1.4946, Friday’s base and 1.4905/11, last week’s low trades.