Cable ($GBPUSD) bull theme re-energizing

  • We stated in our last report to clients on Wednesday that “we look for the 1.6625 level to hold this week to provide a platform for a push back higher, given the early April rally up through 1.6785 set a more bullish tone”.
  • A more robust tone through midweek for a prod back above 1.6800 and overnight a push to a new recovery high through 1.6820/25.
  • This now leaves the threat still higher to target a longer term level at 1.6877, potentially today and certainly into next week.
  • The risk for late April is now still higher to psychological 1.7000 and the multi-year high from 2009 at 1.7042.
  • WHAT CHANGES THIS?
  • Below 1.6625 eases bull risks; through 1.6550 signals a neutral tone, only shifting negative below 1.6465.

Please see full report with levels and latest audio-visual analysis here: http://members.marketchartist.com/Daily/GBPUSD.pdf

 Monthly GBPUSD

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The unemployment rate in the UK for the Dec 2013-February 2014 months was 6.9%, down from the 7.2% for the previous 3 months. This beat economists’ forecasts which was around 7.2% according to forexfactory.com. The 6.9% jobless rate is the lowest in exactly 5 years, since 6.7% was reported in April of 2009 for the Dec. 2008-Jan. 2009 period. The positive surprise for the UK economy sent the GBP soaring, though it was already pivoting towards a bullish continuation in the GBP/USD and GBP/JPY pairs…

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The key event risk for GBP today was the annual CPI for March, which came in at 1.6% as expected, slightly lower than the 1.7% in February. This is the lowest reading in more than 4 years as you can see from the chart below. The BoE is projected to increase its benchmark interest rate in 2015. However, lingering deflationary risk can delay this projection, which would be a GBP-negative factor. Even with this GBP-negative prospect, cable was able to find support after an initial negative reaction to the data…

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EUR/USD is retreating after tagging 1.3905 to end last week. As we get started in the 4/14 US session, the pair is testing the 1.3810-1.3820 area, which may provide support. This area includes a previous resistance as well as 38.2% retracement. The 4H stochastic is also falling towards 20, oversold level. If there is some further downside risk in the near-term, look for support around 50% retracement, which is reinforced by the 100 and 50 SMAs in the 4H chart…

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After coming up from Friday’s price bottom, EUR/USD extended its 4/7 rally during the 4/8 European session. The 4H chart shows a market that briefly consolidated under 1.3740, then popped up as the European session got underway. Note that the 4H stochastic is overbought, and price is testing a projected falling resistance. There could be some near-term resistance around 1.3775, as price stalls there with US traders getting into the session…

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EUR/USD broke above Friday’s range, which was set during the release of the US NFP. After a directionless Friday session, the Monday session shows bullish decision. The market is bullish in the short-term towards the 1.38 handle ahead of Wednesday’s FOMC meeting minutes. Note that the high from last week is at 1.3820. If the market pushes above that, it will also likely break a falling channel resistance, and give a bullish signal. GBP/USD came off Friday’s consolidation price action…

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Last week, GBP/USD slid from the March high of 1.6683. The bearish run has brought the pair down to 61.8% retracement of a previous rally from 1.6454 to 1.6683. From the 1H chart, the GBP/USD does not look very bullish as price is trading under the 200, 100 and 50 simple moving averages. However, if the market can hold above this 61.8% retracement level where it did show some brief support, then the bullish case will look stronger…

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EUR/USD edged lower this week, continuing a bearish mode since it retreated from the 1.3966 high in March. The ECB event risk on Thursday weighed on the euro because the ECB remained dovish. When we look a the daily chart , we see that the bearish run in the past few weeks is within a bullish market. There is still downside risk toward the 1.36 handle, where the 200-day SMA looms. However, with the daily stochastic below 20, I would not be surprised if we get a bullish attempt early next week even before 1.36…

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