Sive Morten
Special Consultant to the FPA
- Messages
- 18,702
Fundamentals
(Reuters) - The U.S. dollar was set for its biggest one-day gain against a basket of major currencies so far this year after a strong U.S. July payrolls report and comments from National Economic Council director Gary Cohn about lowering the U.S. corporate tax rate.
The dollar index, which measures the greenback against six major rivals, jumped about 1 percent to a one-week high of 93.774 after the Labor Department said nonfarm payrolls increased by 209,000 jobs last month and Cohn's comments. It was last up 0.7 percent at 93.529.
Cohn told Bloomberg TV on Friday that the 35 percent U.S. corporate tax rate should be more in line with the 24 percent average rate among other countries in the Organization for Economic Cooperation and Development.
The jobs figure beat expectations of economists polled by Reuters for a gain of 183,000, while average hourly earnings increased 0.3 percent to match expectations after rising 0.2 percent in June.
Analysts said traders who had bet against or "shorted" the dollar - a popular bet as the dollar index posted its biggest monthly drop since March 2016 last month - were being forced to repurchase the currency after the jobs data and Cohn's remarks.
"The jobs number was solid," said Alvise Marino, FX strategist at Credit Suisse in New York. He also said Cohn's comments revived traders' focus on potential tax reform.
The dollar index's gains put it on track for its biggest one-day percentage increase since Dec. 15. The euro fell more than 1 percent against the dollar to a four-day low of $1.1729 after touching a more than 2-1/2-year high of $1.1909 on Wednesday.
While the dollar index was set to post its first weekly percentage gain in four weeks, the euro was still set to post its fourth straight weekly percentage increase against the greenback.
Against the yen, the dollar gained as much as 0.9 percent to a one-week high of 111.04 yen, rising off recent seven-week lows. The dollar touched 0.9763 franc, its highest against the Swiss currency in more than six weeks.
The dollar has suffered in recent months, largely on increased doubts that the Federal Reserve would raise interest rates again this year and obstacles to U.S. President Donald Trump's agenda, which is seen by investors as pro-growth.
The outlook for a December rate hike remained uncertain, with federal funds futures last implying traders saw a roughly 50 percent chance of a December increase on Friday, according to CME Group's FedWatch tool.
"This is just a pause in the weak dollar trend," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
So, guys, as we've dedicated last week totally to GBP, let's finish this topic by new Fathom research on UK economy and GBP in particular:
News in Charts: UK MPC tries to have its cake and eat it
by Fathom Consulting
On Wednesday, we presented an overview of our Global Economic and Markets Outlook for 2017 Q3. The focus of the event, which was hosted by Thomson Reuters in London, was the UK economy, for which Fathom’s outlook is considerably more pessimistic than most. We were joined by former Bank of England policymakers Sir Charlie Bean and Sir John Gieve, both of whom share our concern about the UK’s deteriorating growth prospects.
In our view, with the Bank of England’s Monetary Policy Committee having failed to pull the trigger at this week’s meeting, and with economic growth set to soften further through the second half of this year, Bank Rate will be on hold more or less indefinitely.
But this did not stop the Committee from trying to have its cake and eat it. It voted not to tighten policy at a time when inflation was significantly above target, and was expected to remain so for the duration of the Bank’s forecast horizon, while simultaneously trying to persuade investors that they had failed to price in a sufficiently aggressive policy tightening.
But having made that same complaint last quarter, and with more hawkish rhetoric from several members having falsely motivated expectations of a potential rate hike, markets have grown wise to these siren voices and have ignored the Bank’s message. Sterling closed Thursday down 0.6% against the US dollar, while the gilt curve flattened.
On Wednesday, our panellists and audience concurred that the Bank of England was unlikely to raise rates this week. John Gieve considered there to be a strong case for reversing the post-Brexit cut, but considered it unlikely. 23% of Wednesday’s audience agreed, while 44% felt that Bank Rate would be increased within one to two years on the back of improving economic growth momentum. Others, accounting for almost a third of our audience, considered it to be only a matter of time before a majority forms and Bank Rate is hiked.
However, our analysis of past episodes of dissent reveals that, more often than not, since the Bank was granted operational independence in 1997, those voting for a hike have given up or left the Committee. In fact, with a success rate of 75%, a majority is far more likely to form behind those pushing for a rate cut! In addition, as our chart highlights, it is not the first time that the Committee has looked through above-target inflation, with the relationship between consumer price growth and rate decisions surprisingly poor.
The optimism expressed by those that considered a rate hike to be on the cards was also reflected in their answers to our first question, with a majority (64%) deeming it more likely than not that the UK would avoid recession within the next year. That being said, at 36% a surprisingly high proportion sided with us, believing that there is a greater-then-evens chance of a contraction ahead.
This was a concern shared by our panellist, Charlie Bean, although he said that trying to predict a recession is a “mug’s game”. He is right. With trend growth now significantly weaker, at around 0.3% a quarter in our view, the prospect of dipping into negative growth at any point in time has risen. It is for this reason, and with households under the cosh, that we think there is a greater-than-evens chance of recession.
At Wednesday’s event, Fathom’s Managing Director Erik Britton set out our view on the UK economy, which we have shared with clients in a series of presentations over the past few weeks and in a recent Newsletter. In summary, the UK consumer weathered the Brexit storm better than the majority of forecasters, ourselves included, anticipated. The broad-based failure to predict the strength of consumer spending has been rationalised in numerous ways, but the most persuasive explanation is that households were surprisingly rational, bringing forward expenditure in anticipation of sterling weakness ahead.
Unfortunately, such an explanation carries ominous connotations for an economy dependent on the consumer for growth, as reflected in the data for the first half of this year. Looking ahead, we believe that there is now a greater-than-evens chance of a technical recession in the UK over the next twelve months. We take that view for several reasons. Not only are wages failing to keep pace with the rising cost of living, resulting in an erosion of consumers’ real purchasing power, but household finances are already stretched — as indicated by the household savings ratio having slumped to its lowest level since the 1950s.
Having already dipped into their savings, which a recent survey commissioned by the Bank revealed to be consumers’ preferred means of preserving real consumption, there is little to cushion consumers from the intensifying squeeze ahead. Indeed, we see inflation peaking at 3.2% later this year. Recognising that highly indebted households are more sensitive to changes in their financial situation, official bodies have also threatened to crack the whip if banks do not tighten their lending standards. They may not need to.
Only a small proportion of those surveyed (4%) said that they would rely on additional bank credit to shore up spending, and it is not uncommon for households to spend less and save more in periods of heightened uncertainty. In the past, as our chart highlights, a deterioration in consumer sentiment has been a good predicator of slowing household consumption growth. Notably, June’s inconclusive general election appears to have reignited concerns about the nation’s economic and political prospects.
Both panellists, Charlie Bean and John Gieve, agreed with Fathom that neither investment- nor export-orientated growth was likely to save the day. One reason for this, as highlighted in the chart below, is that exporters have increased the sterling price of their exports by nearly the same amount as the fall in sterling over the past year. Having broadly maintained the price in foreign currency terms, UK exporters have been able to build their profit margins, albeit at the expense of growth in volumes. As Charlie Bean highlighted, this increase in profits would normally promote investment in export capacity, feeding through to the UK economy via this mechanism as opposed to net trade. But with Brexit-related uncertainty likely to weigh on firms’ investment plans, this is unlikely to feed through as hoped.
As a consequence, and “given we are starting from a position where the saving ratio is unusually low”, Charlie Bean concluded “that it is not impossible to think you might get quite a sharp slowdown.” Wednesday’s audience echoed this concern. As our chart shows, when asked to vote the majority chose “further falls in real household incomes as prices continue to rise” as the most likely trigger for a UK recession.
COT Report
Recent CFTC data shows that bearish sentiment is still valid on GBP. Within last three weeks, despite upside action that we see on the market - net short position have increased simultaneously with open interest. It means that bearish pressure is growing - slowly but stubbornly. New shorts were opened during within last three weeks. Investors use this rally as a chance to take better price for selling.
Broader view also hints on bearish nature. As this rally has started in April - while price was growing open interest has dropped. It means that rally mostly gets power from short covering or replacing them with longs but at moderate pace.
Technicals
Monthly
So, on monthly chart GBP has reached our first destination point - minor harmonic swing leg has completed. This area coincides with YPP and upper border of flag consolidation. Overall action was a bit slower than previously. Thus, in Mar 2015 and Nov 2015 it took 4 months to cover the same distance, while now cable was needed 2 times greater period to do this.
Now, our task is to understand - is it all and bearish trend will start again, or, GBP will show another harmonic swing up to YPR1 and 1.4230 area. Practically, this could be estimated by the depth of retracement and reaction on crucial support areas. In general, strong drop as a rule becomes the goldmine of different patterns that we hope to get within few coming weeks.
Despite the depth of upside retracement it will not harm overall bearish technical picture on monthly chart. In fact Cable could show very high retracements there and they still will be just retracement. Action to YPR1 around 1.4240 will be just minor retracement up. To break overall bearish picture here price should exceed 1.72 C point. Hardly this happen very soon.
As we've discussed previously longer term perspective situation also stands unclear. GB has bought Brexit ticket, but currently it is difficult to suggest where it will lead it. Fathom consulting has negative fundamental view on perspective of UK economy at least in nearest 12 months. Finally, taking in consideration possible 150 points US rate hike in 2 years also will be headwind to GBP. That's why we have doubts on perspective of GBP rising in long-term.
Besides, if you will take a look at all-time GBP chart, you'll see that market already has broken major 5/8 Fib support and on a way down, drop is really fast since first leg was on 2008 crisis. Overall fundamental situation is mostly supportive to this scenario, besides, 20 points is not really big distance to GBP that is more volatile than many other major currencies.
Thus we will keep for some case here our next downside target, which is 1.1240 area. This is 1.618 butterfly extension and Yearly Pivot Support 1 area.
Weekly
So, GBP has completed our weekly scenario that we've discussed in last research. Last week market had more bullish signs than bearish ones and we've made suggestion that GBP should complete major 1.3250 target before reversal. As you can see this has happened right before NFP release. 1.3250 is 1.618 butterfly target and 1.618 AB-CD objective point.
What conclusions we could make from this chart? First is, we could suggest the depth of retracement. At least 3/8 bounce of right wing should happen after butterfly completion.
Second, if cable still turn up again, here we have intermediate target that stands prior monthly 1.4230 area. This is 1.3520 - if we will get AB-CD pattern and weekly overbought. It stands around 50% Fib resistance level.
Thus, weekly chart tells - no longs until GBP will make at least 3/8 retracement down. This is important.
Daily
Trend obviously has turned bearish here. On Friday cable slightly has not reached our 1.3010 target. Price has dropped below MPP and now all eyes on 1.2950-1.30 area. First is because in the beginning of the week, market will not drop further and we are not interested in other daily levels as 1.2970 is daily oversold.
And in general, this is rock hard support - K-area, MPS1 and OS.
Second - harmonically, this is potential neckline of H&S pattern, as previous swing stands in 1.618 relation to the top - potential "head' of the pattern. As a result, we already have multiple setups for trading:
1. Trade GBP short while it will not reach 1.2980-1.30 area.
2. Look for bullish reversal patterns on intraday chart and trade it long with 1.31 potential target - as there should be a top of H&S pattern
3. Turn it short again as we could get AB-CD by H&S with 1.2850 destination point.
As you can see - busy week ahead. But this is of course just theoretical setups by far, that could happen.
Intraday
On Friday drop has stopped right at WPS1 of last week. Long-term trend line has been broken. As our 1st step suggests short trading (or keeping shorts if you still have it) - we need to search chances on short entry on some upside retracement.
On Friday we do not see any profit taking, as price close tail. It means that investors mostly sure that downward action should continue. Second - price is not at OS yet on daily chart. Overall plunge was very strong. It means that we should focus on minor upside bounce.
Here we could use DiNapoli "Minesweeper " entry tactics. Daily trend stands bearish, here trend bearish as well. Thus we could try to go short around nearest 1.3076 Fib resistance, while stop should be placed above K-resistance 1.3115 area. This is also WPP.
Still here a lot of nuances could appear. First of all - be aware of strong upside open on Monday. In this case retracement could be deeper and price could even try to re-test broken trendline. Now it seems that odds are minimal to this scenario, but you never know what price will bring as new week will start. So, just keep your eyes open and do not follow me blindly. Any stronger bullish action on Monday will not cancel our scenario, but could adjust levels from which drop will continue.
Say, now we're looking for 1.3075 and .13110, while they could shift to 1 step higher - 1.3110 and 1.3175 levels if opening will be strong.
Conclusion:
Long-term view of GBP looks bearish. As GBP has turned south within few weeks we should get an answer - wether this final reversal down or just retracement before action to 1.42.
On coming week we have some setups for trading and first one is try to catch intraday rally and go short with 1.30 daily target.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
(Reuters) - The U.S. dollar was set for its biggest one-day gain against a basket of major currencies so far this year after a strong U.S. July payrolls report and comments from National Economic Council director Gary Cohn about lowering the U.S. corporate tax rate.
The dollar index, which measures the greenback against six major rivals, jumped about 1 percent to a one-week high of 93.774 after the Labor Department said nonfarm payrolls increased by 209,000 jobs last month and Cohn's comments. It was last up 0.7 percent at 93.529.
Cohn told Bloomberg TV on Friday that the 35 percent U.S. corporate tax rate should be more in line with the 24 percent average rate among other countries in the Organization for Economic Cooperation and Development.
The jobs figure beat expectations of economists polled by Reuters for a gain of 183,000, while average hourly earnings increased 0.3 percent to match expectations after rising 0.2 percent in June.
Analysts said traders who had bet against or "shorted" the dollar - a popular bet as the dollar index posted its biggest monthly drop since March 2016 last month - were being forced to repurchase the currency after the jobs data and Cohn's remarks.
"The jobs number was solid," said Alvise Marino, FX strategist at Credit Suisse in New York. He also said Cohn's comments revived traders' focus on potential tax reform.
The dollar index's gains put it on track for its biggest one-day percentage increase since Dec. 15. The euro fell more than 1 percent against the dollar to a four-day low of $1.1729 after touching a more than 2-1/2-year high of $1.1909 on Wednesday.
While the dollar index was set to post its first weekly percentage gain in four weeks, the euro was still set to post its fourth straight weekly percentage increase against the greenback.
Against the yen, the dollar gained as much as 0.9 percent to a one-week high of 111.04 yen, rising off recent seven-week lows. The dollar touched 0.9763 franc, its highest against the Swiss currency in more than six weeks.
The dollar has suffered in recent months, largely on increased doubts that the Federal Reserve would raise interest rates again this year and obstacles to U.S. President Donald Trump's agenda, which is seen by investors as pro-growth.
The outlook for a December rate hike remained uncertain, with federal funds futures last implying traders saw a roughly 50 percent chance of a December increase on Friday, according to CME Group's FedWatch tool.
"This is just a pause in the weak dollar trend," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
So, guys, as we've dedicated last week totally to GBP, let's finish this topic by new Fathom research on UK economy and GBP in particular:
News in Charts: UK MPC tries to have its cake and eat it
by Fathom Consulting
On Wednesday, we presented an overview of our Global Economic and Markets Outlook for 2017 Q3. The focus of the event, which was hosted by Thomson Reuters in London, was the UK economy, for which Fathom’s outlook is considerably more pessimistic than most. We were joined by former Bank of England policymakers Sir Charlie Bean and Sir John Gieve, both of whom share our concern about the UK’s deteriorating growth prospects.
In our view, with the Bank of England’s Monetary Policy Committee having failed to pull the trigger at this week’s meeting, and with economic growth set to soften further through the second half of this year, Bank Rate will be on hold more or less indefinitely.
But this did not stop the Committee from trying to have its cake and eat it. It voted not to tighten policy at a time when inflation was significantly above target, and was expected to remain so for the duration of the Bank’s forecast horizon, while simultaneously trying to persuade investors that they had failed to price in a sufficiently aggressive policy tightening.
But having made that same complaint last quarter, and with more hawkish rhetoric from several members having falsely motivated expectations of a potential rate hike, markets have grown wise to these siren voices and have ignored the Bank’s message. Sterling closed Thursday down 0.6% against the US dollar, while the gilt curve flattened.
On Wednesday, our panellists and audience concurred that the Bank of England was unlikely to raise rates this week. John Gieve considered there to be a strong case for reversing the post-Brexit cut, but considered it unlikely. 23% of Wednesday’s audience agreed, while 44% felt that Bank Rate would be increased within one to two years on the back of improving economic growth momentum. Others, accounting for almost a third of our audience, considered it to be only a matter of time before a majority forms and Bank Rate is hiked.
However, our analysis of past episodes of dissent reveals that, more often than not, since the Bank was granted operational independence in 1997, those voting for a hike have given up or left the Committee. In fact, with a success rate of 75%, a majority is far more likely to form behind those pushing for a rate cut! In addition, as our chart highlights, it is not the first time that the Committee has looked through above-target inflation, with the relationship between consumer price growth and rate decisions surprisingly poor.
The optimism expressed by those that considered a rate hike to be on the cards was also reflected in their answers to our first question, with a majority (64%) deeming it more likely than not that the UK would avoid recession within the next year. That being said, at 36% a surprisingly high proportion sided with us, believing that there is a greater-then-evens chance of a contraction ahead.
This was a concern shared by our panellist, Charlie Bean, although he said that trying to predict a recession is a “mug’s game”. He is right. With trend growth now significantly weaker, at around 0.3% a quarter in our view, the prospect of dipping into negative growth at any point in time has risen. It is for this reason, and with households under the cosh, that we think there is a greater-than-evens chance of recession.
At Wednesday’s event, Fathom’s Managing Director Erik Britton set out our view on the UK economy, which we have shared with clients in a series of presentations over the past few weeks and in a recent Newsletter. In summary, the UK consumer weathered the Brexit storm better than the majority of forecasters, ourselves included, anticipated. The broad-based failure to predict the strength of consumer spending has been rationalised in numerous ways, but the most persuasive explanation is that households were surprisingly rational, bringing forward expenditure in anticipation of sterling weakness ahead.
Unfortunately, such an explanation carries ominous connotations for an economy dependent on the consumer for growth, as reflected in the data for the first half of this year. Looking ahead, we believe that there is now a greater-than-evens chance of a technical recession in the UK over the next twelve months. We take that view for several reasons. Not only are wages failing to keep pace with the rising cost of living, resulting in an erosion of consumers’ real purchasing power, but household finances are already stretched — as indicated by the household savings ratio having slumped to its lowest level since the 1950s.
Having already dipped into their savings, which a recent survey commissioned by the Bank revealed to be consumers’ preferred means of preserving real consumption, there is little to cushion consumers from the intensifying squeeze ahead. Indeed, we see inflation peaking at 3.2% later this year. Recognising that highly indebted households are more sensitive to changes in their financial situation, official bodies have also threatened to crack the whip if banks do not tighten their lending standards. They may not need to.
Only a small proportion of those surveyed (4%) said that they would rely on additional bank credit to shore up spending, and it is not uncommon for households to spend less and save more in periods of heightened uncertainty. In the past, as our chart highlights, a deterioration in consumer sentiment has been a good predicator of slowing household consumption growth. Notably, June’s inconclusive general election appears to have reignited concerns about the nation’s economic and political prospects.
Both panellists, Charlie Bean and John Gieve, agreed with Fathom that neither investment- nor export-orientated growth was likely to save the day. One reason for this, as highlighted in the chart below, is that exporters have increased the sterling price of their exports by nearly the same amount as the fall in sterling over the past year. Having broadly maintained the price in foreign currency terms, UK exporters have been able to build their profit margins, albeit at the expense of growth in volumes. As Charlie Bean highlighted, this increase in profits would normally promote investment in export capacity, feeding through to the UK economy via this mechanism as opposed to net trade. But with Brexit-related uncertainty likely to weigh on firms’ investment plans, this is unlikely to feed through as hoped.
As a consequence, and “given we are starting from a position where the saving ratio is unusually low”, Charlie Bean concluded “that it is not impossible to think you might get quite a sharp slowdown.” Wednesday’s audience echoed this concern. As our chart shows, when asked to vote the majority chose “further falls in real household incomes as prices continue to rise” as the most likely trigger for a UK recession.
COT Report
Recent CFTC data shows that bearish sentiment is still valid on GBP. Within last three weeks, despite upside action that we see on the market - net short position have increased simultaneously with open interest. It means that bearish pressure is growing - slowly but stubbornly. New shorts were opened during within last three weeks. Investors use this rally as a chance to take better price for selling.
Broader view also hints on bearish nature. As this rally has started in April - while price was growing open interest has dropped. It means that rally mostly gets power from short covering or replacing them with longs but at moderate pace.
Technicals
Monthly
So, on monthly chart GBP has reached our first destination point - minor harmonic swing leg has completed. This area coincides with YPP and upper border of flag consolidation. Overall action was a bit slower than previously. Thus, in Mar 2015 and Nov 2015 it took 4 months to cover the same distance, while now cable was needed 2 times greater period to do this.
Now, our task is to understand - is it all and bearish trend will start again, or, GBP will show another harmonic swing up to YPR1 and 1.4230 area. Practically, this could be estimated by the depth of retracement and reaction on crucial support areas. In general, strong drop as a rule becomes the goldmine of different patterns that we hope to get within few coming weeks.
Despite the depth of upside retracement it will not harm overall bearish technical picture on monthly chart. In fact Cable could show very high retracements there and they still will be just retracement. Action to YPR1 around 1.4240 will be just minor retracement up. To break overall bearish picture here price should exceed 1.72 C point. Hardly this happen very soon.
As we've discussed previously longer term perspective situation also stands unclear. GB has bought Brexit ticket, but currently it is difficult to suggest where it will lead it. Fathom consulting has negative fundamental view on perspective of UK economy at least in nearest 12 months. Finally, taking in consideration possible 150 points US rate hike in 2 years also will be headwind to GBP. That's why we have doubts on perspective of GBP rising in long-term.
Besides, if you will take a look at all-time GBP chart, you'll see that market already has broken major 5/8 Fib support and on a way down, drop is really fast since first leg was on 2008 crisis. Overall fundamental situation is mostly supportive to this scenario, besides, 20 points is not really big distance to GBP that is more volatile than many other major currencies.
Thus we will keep for some case here our next downside target, which is 1.1240 area. This is 1.618 butterfly extension and Yearly Pivot Support 1 area.
Weekly
So, GBP has completed our weekly scenario that we've discussed in last research. Last week market had more bullish signs than bearish ones and we've made suggestion that GBP should complete major 1.3250 target before reversal. As you can see this has happened right before NFP release. 1.3250 is 1.618 butterfly target and 1.618 AB-CD objective point.
What conclusions we could make from this chart? First is, we could suggest the depth of retracement. At least 3/8 bounce of right wing should happen after butterfly completion.
Second, if cable still turn up again, here we have intermediate target that stands prior monthly 1.4230 area. This is 1.3520 - if we will get AB-CD pattern and weekly overbought. It stands around 50% Fib resistance level.
Thus, weekly chart tells - no longs until GBP will make at least 3/8 retracement down. This is important.
Daily
Trend obviously has turned bearish here. On Friday cable slightly has not reached our 1.3010 target. Price has dropped below MPP and now all eyes on 1.2950-1.30 area. First is because in the beginning of the week, market will not drop further and we are not interested in other daily levels as 1.2970 is daily oversold.
And in general, this is rock hard support - K-area, MPS1 and OS.
Second - harmonically, this is potential neckline of H&S pattern, as previous swing stands in 1.618 relation to the top - potential "head' of the pattern. As a result, we already have multiple setups for trading:
1. Trade GBP short while it will not reach 1.2980-1.30 area.
2. Look for bullish reversal patterns on intraday chart and trade it long with 1.31 potential target - as there should be a top of H&S pattern
3. Turn it short again as we could get AB-CD by H&S with 1.2850 destination point.
As you can see - busy week ahead. But this is of course just theoretical setups by far, that could happen.
Intraday
On Friday drop has stopped right at WPS1 of last week. Long-term trend line has been broken. As our 1st step suggests short trading (or keeping shorts if you still have it) - we need to search chances on short entry on some upside retracement.
On Friday we do not see any profit taking, as price close tail. It means that investors mostly sure that downward action should continue. Second - price is not at OS yet on daily chart. Overall plunge was very strong. It means that we should focus on minor upside bounce.
Here we could use DiNapoli "Minesweeper " entry tactics. Daily trend stands bearish, here trend bearish as well. Thus we could try to go short around nearest 1.3076 Fib resistance, while stop should be placed above K-resistance 1.3115 area. This is also WPP.
Still here a lot of nuances could appear. First of all - be aware of strong upside open on Monday. In this case retracement could be deeper and price could even try to re-test broken trendline. Now it seems that odds are minimal to this scenario, but you never know what price will bring as new week will start. So, just keep your eyes open and do not follow me blindly. Any stronger bullish action on Monday will not cancel our scenario, but could adjust levels from which drop will continue.
Say, now we're looking for 1.3075 and .13110, while they could shift to 1 step higher - 1.3110 and 1.3175 levels if opening will be strong.
Conclusion:
Long-term view of GBP looks bearish. As GBP has turned south within few weeks we should get an answer - wether this final reversal down or just retracement before action to 1.42.
On coming week we have some setups for trading and first one is try to catch intraday rally and go short with 1.30 daily target.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
Your "K" & OB_OS is simply awesome..
