Sive Morten
Special Consultant to the FPA
- Messages
- 18,648
Fundamentals
Reuters reports dollar fell on Friday, reducing its monthly gain against a basket of currencies, as traders who favored commodity-linked currencies booked profits on gains tied to the U.S. Federal Reserve's unexpected hint it may raise rates in December.
A rise in oil and other commodities prices lifted the Australian and New Zealand dollar. The latter also got a boost from improved domestic business confidence, which advanced for a second month on a rebound in dairy prices.
The dollar index, which measures the greenback against six major currencies, fell 0.3 percent to 96.995 . For October, the dollar was up 0.6 percent, for its second straight monthly gain.
"The dollar had a good couple weeks with the European Central Bank surprise and the Fed surprise, but obviously there's still a little uncertainty about whether the Fed will be able to raise in December," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.
"I think the tendency was to take profit on those dollar positions that have done well in the past of couple weeks and reposition for next week," he said.
The U.S. dollar struggled after data showed U.S. consumer spending in September posted its smallest gain in eight months while inflation remained stalled.
The New Zealand dollar ended near its session high at $0.6777, up 1.2 percent on the day. The Aussie climbed 0.9 percent to $0.7129. Both currencies had fallen the previous three sessions.
The yen rose in the wake of Bank of Japan's decision to leave monetary policy unchanged, despite rate cuts from China and easing signals from the ECB. The dollar slipped 0.4 percent at 120.66 yen, while the euro fell 0.2 percent to 132.69 yen .
The greenback fell as low as 120.29 yen after the BoJ announcement, before reversing course radically on a report by the Nikkei newspaper that Japan's government is considering adding a 3 trillion yen ($24.77 billion) extra budget in preparation for the trans-Pacific trade pact.
The euro was also up modestly against the dollar, supported by an unexpected improvement in euro zone economic sentiment and signs of faster-than-expected inflation in Germany. It was last at $1.0993, up 0.2 percent .
Among other major currencies, the pound rose on bets the Bank of England could raise interest rates earlier than previously expected. Against the dollar, sterling was up 0.7 percent at $1.5418 , retreating from an earlier gain of more than 1 percent.
Sterling rose to six-week high against a trade-weighted basket of currencies on Friday, bolstered by expectations that British interest rates may rise faster than previously anticipated.
That view grew after the Federal Reserve earlier this week signalled it may raise rates in December. Investors have brought forward expectations of a first rate increase by the Bank of England to the third quarter of 2016, after pricing in a chance of a move in the fourth quarter at the start of the week.
The BoE is expected to become the second major central bank after the Fed to raise rates since the financial crisis. By contrast, the European Central Bank said last week it was prepared to loosen policy further in the euro zone, Britain's biggest trading partner.
The sterling index was at 92.8, its highest since Sept. 21, and on track for its best monthly performance since June this year.
Against the dollar, sterling was up 0.5 percent at $1.5390 , with the greenback struggling after data showed U.S. inflation was still rather muted.
The euro was higher at 71.88 pence , though not far from a recent two-month low of 71.45 pence struck on Thursday, with month-end demand helping the single currency.
Attention will now be on the BoE's Quarterly Inflation Report, which will be released on "Super Thursday" along with a rate decision and the minutes from the latest monetary policy committee (MPC) meeting.
"Sterling is sidelined with little anticipation of next week's inflation report. Somewhat more hawkish Fed signals, however, could see some pulling forward of BoE hike expectations and support sterling in the near term," said Josh O'Byrne, currency strategist at Citi.
The BoE has said it does not need to wait for the Fed before it raises rates. But many investors reckon it would not risk going first.
Apart from considering the Fed's moves, the BoE will also be looking closely at domestic data, which have suggested a period of rapid expansion might be ending. Concern the UK could leave the European Union gives investors another reason to be edgy about the pound.
On Thursday, Standard and Poor's warned the UK might face a downgrade of at least one notch in its AAA rating if it votes in a referendum to leave the EU, and two notches if relations between London and Brussels sour or that vote prompts secession from the UK by Scotland.
"The EU referendum is likely to be held in Sept. 2016 at the earliest, we believe, but the debate is already gaining momentum and as a result sterling could start to feel the impact if investor uncertainty towards UK assets starts to build," Morgan Stanley said in a note.
Although, guys, recently we hear a lot of speculations on possible rate hike in UK, it is not as cloudless as it seems. Last time we provided different view on UK perspectives on rate hike and they have logic. This combination of opposite expectation and reality could trigger strong action on GBP to the downside. So, this probably will be super-Thursday on coming week...
Here is fresh opinion on possible opposite solution of BoE on coming Thursday by Alpha Now:
Over the past month, the point at which a 25 basis point increase in UK Bank Rate is fully priced in has been pushed back by four months. A move is now expected in either late 2016 or early 2017. That has been our position since the beginning of this year. Whereas once we were out on a limb, now our views appear close to consensus.
Back in January we pushed out the point at which we expected the UK MPC to tighten by a whole year, from 2016 Q1 to 2017 Q1. At the time, we were out on a limb, with both market-implied pricing and other economic forecasters suggesting that the Committee would tighten much sooner. Indeed, market pricing pointed to a tightening as early as April 2016. A Reuters poll of UK economists pointed to an even earlier date, with consensus settling on 2015 Q4.
Nevertheless, we felt that the disinflationary consequences of China’s slowdown played into the hands of a Committee that had long been looking for reasons not to tighten. Now we are not so alone. Latest market pricing suggests that investors now expect a tightening by December 2016 — a whole four months later than was the case one month ago.
Contributing to this shift in sentiment has been mounting global growth concerns, triggered by China’s hard landing. This has been compounded by the Minutes of last week’s Monetary Policy Committee meeting, which were interpreted as dovish and have added to a growing consensus among investors that a UK rate hike is a dim and distant prospect.
____________________________________________________________________
So, guys, this could become the corner stone of GBP action on coming week. Now, let's see what we have on sentiment. Open interest mostly stands flat as market has turned to wide fluctuations without direction. Initially as expectation of rate hike has started to rise - investors have increased long positions, but right now analysis of CFTC data does not bring something special.
The one thing that we would like to mention is that at the end of 2014 Open interest has reached historical top and whole 2015 year, open interest is decreasing. Speculative positions right now are mostly equal around 40K contracts. While open interest stands around 170 K contracts and it has dropped in 2015 for 100K contracts. This is the tendency...
Open Interest:
Longs:
Shorts:
So by analysis of overall fundamental picture we could make a conclusion that right now market really expects good inflation data and rate hike or at least definite rhetoric in favor of this hike in nearest future, say, in December. While BoE sentiment shows that they would like to postpone rate hike as far as possible and now they have reasons to do this, based on overall global economy slow down. Besides, as statistics shows - hardly Inflation data will jump above desirable 2%. It means that Thursday could become a big day of disappointment. Positive relations stands on surface in all mass media right now, but to get the core you need to dig deeper. So, bets are high on Thursday...
Technicals
As usual, we continue to keep our long-term analysis that we’ve made in December 2013 in our Forex Military School Course, where we were learning Elliot Waves technique.
Long Term Forecast on GBP rate
Our long term analysis suggests first appearing of new high on 4th wave at ~1.76 level and then starting of last 5th wave down. First condition was accomplished and we’ve got new high, but it was a bit lower – not 1.76 but 1.72. This was and is all time support/resistance area. Now we stand in final part of our journey. According to our 2013 analysis market should reach lows at 1.35 area. Let’s see what additional information we have right now.
Trend is bearish here, but GBP is not at oversold. Couple of months ago market has reached strong support area – Yearly Pivot support 1 and 5/8 major monthly Fib level. Market gradually was struggling through YPS1 but it seems that first attempt to pass through it has failed.
Our conclusion was - GBP will continue move down, but after some retracement.Right now it seems that downward action is re-establishing. Also we have huge AB-CD pattern that specifies target with more precision. It is not quite 1.35, actually it is 1.3088.
August month has become bearish grabber that suggests taking out of 1.45 lows. So we have pattern on monthly chart that gives us clear direction for considerable time period. September has become also a bearish grabber and take a look October - as well. It means that market gradually was challenge upside action but fails within 3 recent month.
Appearing of these patterns let's us easily specify conditions of validity of bearish scenario. It probably will be valid until market will stay below 1.5930 top. It is preferably if at least one grabber will survive if upside retracement will be stronger.
As opposite action to our bearish scenario we could suggest minor AB-CD upside action first. This probably could happen only on real BoE hints on rate hiking. But even if AB=CD pattern will be formed - it will not cancel long-term bearish setup yet, but just postpone it for some time. For example, after AB-CD we could get extended "222" Sell pattern on monthly chart... But since this is too long perspective for us, we mostly look at shorter-term setup that is based on grabbers by far. We will split long-term picture in shorter-term scenarios. First one is based on grabbers. If it will fail, next one will be probably based on upside AB-CD, something like that...
Weekly
Weekly chart right now is most difficult for interpretation. Taking in consideration all fundamental stuff and monthly bearish patterns we should suggest downward continuation. For example, we could get butterfly "Buy" pattern that could become first one on a way down. Butterfly also lets market to fluctuate inside initial swing and does not forbid action a bit higher. The major condition - price should stay below 1.5930 level.
At the same time, market has formed upside reversal swing from 1.4560 lows. Although trend has turned bearish - we do not see any drop. Hence, it could be the sign of bullish dynamic pressure. This uncertainty forces us to search way for risk minimization. Thus, conservative way for short entry is after breakout of 1.5180 lows probably. If you still would like to anticipate bearish reversal - try to take short position as closer to 1.5930 top as possible. Since right above stands invalidation point of our short-term bearish setup. Thus, as closer to 1.5930 you will take short position as less risk you will get.
The same is true probably for bullish scenario. We should wait either 1.5930 breakout or take position as close to 1.5180 lows as possible. Better to get additional confirmation by short-term reversal patterns on 4-hour or hourly charts. Besides, upside butterfly here is also possible...
That's being said, weekly chart does not give clear picture on possible action next week. Overall points stand in favor of bears by far, but they do not forbid market to move slightly higher until it stands below 1.5930.
Daily
When market turns to some chaotic fluctuations without major driving factor, we need to increase scale of analysis and unite swings in big patterns. On daily chart particular this situation. Take a look at upside swings from 1.4530 lows. They are strong, second swing was reversal one, but on 3rd swing market was not able to continue move up and break weekly Fib resistance level. So, here we see some exhausting of bullish power. 4th upside swing was not able even to reach previous top and downside swings shows thrusting action.
As a result we've got something that looks like big triangle pattern. Last two swings have not reached upper border of this pattern and it looks bearish. May be market has not shown bearish breakout earlier just because 1.50 is strong Fib support and YPS1 and it has held market from further drop. Rally that has happened 2 weeks ago on bad US NFP data also has been erased.
Yes, theoretically we could recognize here potential upside butterflies - the big one and small, but the question is whether they will be formed at all. I do not know what you think, guys, but obviously upside swings have become less since April and overcome by downside swings since June. This makes me think that although we do not see clear demonstration of bears' power but it exists.
4-hour
Now let's dig for details. On 4-hour chart we have minor triangle. It is inside one for daily pattern. But we mostly are interested not in triangle per se but in AB-CD pattern that stands inside of it. Now we need follow it step by step to understand market mechanics. This will let us to make correct conclusion on what should happen if market is really bullish.
AB leg is first upward action from support area, then reasonable retracement has followed. This is clear. CD leg is extension and has very clear signs of thrust. This was NFP data in US. As a result market has completed AB=CD target. Pay attention that CD leg is much faster than AB and it assumes further upside continuation.
Retracement after completion of AB=CD was too deep that hardly agrees with the strength of CD leg, but so be it. Now we again have the signs of thrust, but if market is really bullish it should go to next target, which is 1.618 around 1.5640. Cable should not show any solid retracements here, because all necessary ones already has been done earlier. Market just should continue move to next target, because it stands right now in extension. That's why current point is very important. If market will fail here to break it up and turn down - this will significantly increase bearish reversal on Cable.
Hourly
Finally, here we could monitor DiNapoli patterns. Scalp traders may be decide to trade them, but for us mostly it is important what we will get - DRPO "Sell" will be first step to failure of bulls, while breakout or DRPO "Sell" Failure pattern will confirm breakout and possible action to 1.5640 area, which postpone bulls/bears breakout moment on later time. Until market stands below 1.5930 bears have the chance to take control over the market.
Conclusion:
GBP long term setup still holds bearish in long-term. UK statistics and BoE sentiment tell that it is too early for celebrating of rate hiking event and it is not the fact yet that we will see it in 2015, although mass media pumps the stir around Thursday by bullish comments. We can't exclude that this day could become miserable disappointment session for GBP bullish traders.
Since situation is really complex, in shorter term perspective we will not try to anticipate events and will watch for clear technical performance. And we will start right from the level when market stands right now. Because it should clarify what will happen next.
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 reports dollar fell on Friday, reducing its monthly gain against a basket of currencies, as traders who favored commodity-linked currencies booked profits on gains tied to the U.S. Federal Reserve's unexpected hint it may raise rates in December.
A rise in oil and other commodities prices lifted the Australian and New Zealand dollar. The latter also got a boost from improved domestic business confidence, which advanced for a second month on a rebound in dairy prices.
The dollar index, which measures the greenback against six major currencies, fell 0.3 percent to 96.995 . For October, the dollar was up 0.6 percent, for its second straight monthly gain.
"The dollar had a good couple weeks with the European Central Bank surprise and the Fed surprise, but obviously there's still a little uncertainty about whether the Fed will be able to raise in December," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.
"I think the tendency was to take profit on those dollar positions that have done well in the past of couple weeks and reposition for next week," he said.
The U.S. dollar struggled after data showed U.S. consumer spending in September posted its smallest gain in eight months while inflation remained stalled.
The New Zealand dollar ended near its session high at $0.6777, up 1.2 percent on the day. The Aussie climbed 0.9 percent to $0.7129. Both currencies had fallen the previous three sessions.
The yen rose in the wake of Bank of Japan's decision to leave monetary policy unchanged, despite rate cuts from China and easing signals from the ECB. The dollar slipped 0.4 percent at 120.66 yen, while the euro fell 0.2 percent to 132.69 yen .
The greenback fell as low as 120.29 yen after the BoJ announcement, before reversing course radically on a report by the Nikkei newspaper that Japan's government is considering adding a 3 trillion yen ($24.77 billion) extra budget in preparation for the trans-Pacific trade pact.
The euro was also up modestly against the dollar, supported by an unexpected improvement in euro zone economic sentiment and signs of faster-than-expected inflation in Germany. It was last at $1.0993, up 0.2 percent .
Among other major currencies, the pound rose on bets the Bank of England could raise interest rates earlier than previously expected. Against the dollar, sterling was up 0.7 percent at $1.5418 , retreating from an earlier gain of more than 1 percent.
Sterling rose to six-week high against a trade-weighted basket of currencies on Friday, bolstered by expectations that British interest rates may rise faster than previously anticipated.
That view grew after the Federal Reserve earlier this week signalled it may raise rates in December. Investors have brought forward expectations of a first rate increase by the Bank of England to the third quarter of 2016, after pricing in a chance of a move in the fourth quarter at the start of the week.
The BoE is expected to become the second major central bank after the Fed to raise rates since the financial crisis. By contrast, the European Central Bank said last week it was prepared to loosen policy further in the euro zone, Britain's biggest trading partner.
The sterling index was at 92.8, its highest since Sept. 21, and on track for its best monthly performance since June this year.
Against the dollar, sterling was up 0.5 percent at $1.5390 , with the greenback struggling after data showed U.S. inflation was still rather muted.
The euro was higher at 71.88 pence , though not far from a recent two-month low of 71.45 pence struck on Thursday, with month-end demand helping the single currency.
Attention will now be on the BoE's Quarterly Inflation Report, which will be released on "Super Thursday" along with a rate decision and the minutes from the latest monetary policy committee (MPC) meeting.
"Sterling is sidelined with little anticipation of next week's inflation report. Somewhat more hawkish Fed signals, however, could see some pulling forward of BoE hike expectations and support sterling in the near term," said Josh O'Byrne, currency strategist at Citi.
The BoE has said it does not need to wait for the Fed before it raises rates. But many investors reckon it would not risk going first.
Apart from considering the Fed's moves, the BoE will also be looking closely at domestic data, which have suggested a period of rapid expansion might be ending. Concern the UK could leave the European Union gives investors another reason to be edgy about the pound.
On Thursday, Standard and Poor's warned the UK might face a downgrade of at least one notch in its AAA rating if it votes in a referendum to leave the EU, and two notches if relations between London and Brussels sour or that vote prompts secession from the UK by Scotland.
"The EU referendum is likely to be held in Sept. 2016 at the earliest, we believe, but the debate is already gaining momentum and as a result sterling could start to feel the impact if investor uncertainty towards UK assets starts to build," Morgan Stanley said in a note.
Although, guys, recently we hear a lot of speculations on possible rate hike in UK, it is not as cloudless as it seems. Last time we provided different view on UK perspectives on rate hike and they have logic. This combination of opposite expectation and reality could trigger strong action on GBP to the downside. So, this probably will be super-Thursday on coming week...
Here is fresh opinion on possible opposite solution of BoE on coming Thursday by Alpha Now:
Over the past month, the point at which a 25 basis point increase in UK Bank Rate is fully priced in has been pushed back by four months. A move is now expected in either late 2016 or early 2017. That has been our position since the beginning of this year. Whereas once we were out on a limb, now our views appear close to consensus.
Back in January we pushed out the point at which we expected the UK MPC to tighten by a whole year, from 2016 Q1 to 2017 Q1. At the time, we were out on a limb, with both market-implied pricing and other economic forecasters suggesting that the Committee would tighten much sooner. Indeed, market pricing pointed to a tightening as early as April 2016. A Reuters poll of UK economists pointed to an even earlier date, with consensus settling on 2015 Q4.
Nevertheless, we felt that the disinflationary consequences of China’s slowdown played into the hands of a Committee that had long been looking for reasons not to tighten. Now we are not so alone. Latest market pricing suggests that investors now expect a tightening by December 2016 — a whole four months later than was the case one month ago.
Contributing to this shift in sentiment has been mounting global growth concerns, triggered by China’s hard landing. This has been compounded by the Minutes of last week’s Monetary Policy Committee meeting, which were interpreted as dovish and have added to a growing consensus among investors that a UK rate hike is a dim and distant prospect.
____________________________________________________________________
So, guys, this could become the corner stone of GBP action on coming week. Now, let's see what we have on sentiment. Open interest mostly stands flat as market has turned to wide fluctuations without direction. Initially as expectation of rate hike has started to rise - investors have increased long positions, but right now analysis of CFTC data does not bring something special.
The one thing that we would like to mention is that at the end of 2014 Open interest has reached historical top and whole 2015 year, open interest is decreasing. Speculative positions right now are mostly equal around 40K contracts. While open interest stands around 170 K contracts and it has dropped in 2015 for 100K contracts. This is the tendency...
Open Interest:
Longs:
Shorts:
So by analysis of overall fundamental picture we could make a conclusion that right now market really expects good inflation data and rate hike or at least definite rhetoric in favor of this hike in nearest future, say, in December. While BoE sentiment shows that they would like to postpone rate hike as far as possible and now they have reasons to do this, based on overall global economy slow down. Besides, as statistics shows - hardly Inflation data will jump above desirable 2%. It means that Thursday could become a big day of disappointment. Positive relations stands on surface in all mass media right now, but to get the core you need to dig deeper. So, bets are high on Thursday...
Technicals
As usual, we continue to keep our long-term analysis that we’ve made in December 2013 in our Forex Military School Course, where we were learning Elliot Waves technique.
Long Term Forecast on GBP rate
Our long term analysis suggests first appearing of new high on 4th wave at ~1.76 level and then starting of last 5th wave down. First condition was accomplished and we’ve got new high, but it was a bit lower – not 1.76 but 1.72. This was and is all time support/resistance area. Now we stand in final part of our journey. According to our 2013 analysis market should reach lows at 1.35 area. Let’s see what additional information we have right now.
Trend is bearish here, but GBP is not at oversold. Couple of months ago market has reached strong support area – Yearly Pivot support 1 and 5/8 major monthly Fib level. Market gradually was struggling through YPS1 but it seems that first attempt to pass through it has failed.
Our conclusion was - GBP will continue move down, but after some retracement.Right now it seems that downward action is re-establishing. Also we have huge AB-CD pattern that specifies target with more precision. It is not quite 1.35, actually it is 1.3088.
August month has become bearish grabber that suggests taking out of 1.45 lows. So we have pattern on monthly chart that gives us clear direction for considerable time period. September has become also a bearish grabber and take a look October - as well. It means that market gradually was challenge upside action but fails within 3 recent month.
Appearing of these patterns let's us easily specify conditions of validity of bearish scenario. It probably will be valid until market will stay below 1.5930 top. It is preferably if at least one grabber will survive if upside retracement will be stronger.
As opposite action to our bearish scenario we could suggest minor AB-CD upside action first. This probably could happen only on real BoE hints on rate hiking. But even if AB=CD pattern will be formed - it will not cancel long-term bearish setup yet, but just postpone it for some time. For example, after AB-CD we could get extended "222" Sell pattern on monthly chart... But since this is too long perspective for us, we mostly look at shorter-term setup that is based on grabbers by far. We will split long-term picture in shorter-term scenarios. First one is based on grabbers. If it will fail, next one will be probably based on upside AB-CD, something like that...
Weekly
Weekly chart right now is most difficult for interpretation. Taking in consideration all fundamental stuff and monthly bearish patterns we should suggest downward continuation. For example, we could get butterfly "Buy" pattern that could become first one on a way down. Butterfly also lets market to fluctuate inside initial swing and does not forbid action a bit higher. The major condition - price should stay below 1.5930 level.
At the same time, market has formed upside reversal swing from 1.4560 lows. Although trend has turned bearish - we do not see any drop. Hence, it could be the sign of bullish dynamic pressure. This uncertainty forces us to search way for risk minimization. Thus, conservative way for short entry is after breakout of 1.5180 lows probably. If you still would like to anticipate bearish reversal - try to take short position as closer to 1.5930 top as possible. Since right above stands invalidation point of our short-term bearish setup. Thus, as closer to 1.5930 you will take short position as less risk you will get.
The same is true probably for bullish scenario. We should wait either 1.5930 breakout or take position as close to 1.5180 lows as possible. Better to get additional confirmation by short-term reversal patterns on 4-hour or hourly charts. Besides, upside butterfly here is also possible...
That's being said, weekly chart does not give clear picture on possible action next week. Overall points stand in favor of bears by far, but they do not forbid market to move slightly higher until it stands below 1.5930.
Daily
When market turns to some chaotic fluctuations without major driving factor, we need to increase scale of analysis and unite swings in big patterns. On daily chart particular this situation. Take a look at upside swings from 1.4530 lows. They are strong, second swing was reversal one, but on 3rd swing market was not able to continue move up and break weekly Fib resistance level. So, here we see some exhausting of bullish power. 4th upside swing was not able even to reach previous top and downside swings shows thrusting action.
As a result we've got something that looks like big triangle pattern. Last two swings have not reached upper border of this pattern and it looks bearish. May be market has not shown bearish breakout earlier just because 1.50 is strong Fib support and YPS1 and it has held market from further drop. Rally that has happened 2 weeks ago on bad US NFP data also has been erased.
Yes, theoretically we could recognize here potential upside butterflies - the big one and small, but the question is whether they will be formed at all. I do not know what you think, guys, but obviously upside swings have become less since April and overcome by downside swings since June. This makes me think that although we do not see clear demonstration of bears' power but it exists.
4-hour
Now let's dig for details. On 4-hour chart we have minor triangle. It is inside one for daily pattern. But we mostly are interested not in triangle per se but in AB-CD pattern that stands inside of it. Now we need follow it step by step to understand market mechanics. This will let us to make correct conclusion on what should happen if market is really bullish.
AB leg is first upward action from support area, then reasonable retracement has followed. This is clear. CD leg is extension and has very clear signs of thrust. This was NFP data in US. As a result market has completed AB=CD target. Pay attention that CD leg is much faster than AB and it assumes further upside continuation.
Retracement after completion of AB=CD was too deep that hardly agrees with the strength of CD leg, but so be it. Now we again have the signs of thrust, but if market is really bullish it should go to next target, which is 1.618 around 1.5640. Cable should not show any solid retracements here, because all necessary ones already has been done earlier. Market just should continue move to next target, because it stands right now in extension. That's why current point is very important. If market will fail here to break it up and turn down - this will significantly increase bearish reversal on Cable.
Hourly
Finally, here we could monitor DiNapoli patterns. Scalp traders may be decide to trade them, but for us mostly it is important what we will get - DRPO "Sell" will be first step to failure of bulls, while breakout or DRPO "Sell" Failure pattern will confirm breakout and possible action to 1.5640 area, which postpone bulls/bears breakout moment on later time. Until market stands below 1.5930 bears have the chance to take control over the market.
Conclusion:
GBP long term setup still holds bearish in long-term. UK statistics and BoE sentiment tell that it is too early for celebrating of rate hiking event and it is not the fact yet that we will see it in 2015, although mass media pumps the stir around Thursday by bullish comments. We can't exclude that this day could become miserable disappointment session for GBP bullish traders.
Since situation is really complex, in shorter term perspective we will not try to anticipate events and will watch for clear technical performance. And we will start right from the level when market stands right now. Because it should clarify what will happen next.
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.
