Spread Betting Opportunities
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Monday 3 March, 2008
This edition of Spread Betting Opportunities maps the path for the British Pounds (Cable) in the sessions ahead.
Market Review: $/£
Over the past two weeks, the Cable has moved from a low of 1.9370 to a high of 1.9946, presenting profitable spread betting opportunities for traders. However, the Cable’s big gains over the past couple of weeks should have come as no surprise to subscribers to the Market Timing Update
In my analysis of the Cable in the Monday February 18 2008, edition of the Market Timing Update (which was sent out to subscribers on the preceding Sunday evening), I concluded by stating that:
” In the short term, the upside appears capped around 1.97 and the move lower to retest 1.9395 is now already underway."
At the time of writing that, the chart of the Cable looked like this:
Indeed, a few days later, the Cable hit the anticipated price target. By the end of trading on Wednesday February 20, the chart of the Cable looked like this:
Having enabled subscribers to the Market Timing Update to enjoy substantial profits from the sharp decline in the Cable, in my follow-up analysis of the $/£currency pair in the Thursday February 21 2008, edition of the Market Timing Update (which was sent out to subscribers on the preceding Wednesday evening), I warned of an impending bullish move in the Cable, stating that:
” I have closed out my short position in the Cable (Wednesday) as I now expect another attempt to bounce off the current price area...the underlying market dynamics appear be changing and the Cable may stage a sustained rally from around current levels."
I followed that up by writing that:
”1.9768 is immediate upside target and the market reaction at that price resistance area would indicate whether the ongoing rally has staying power. The technical evidence at this point indicates that it does and suggests that the Cable should trade at 1.9950 and possibly higher around 2.01 in the sessions ahead.”
Indeed, less than two weeks later, the most recent chart of the Cable looks like this:
The Second upside price target of 1.9950 has virtually been hit, with the move higher to 1.9946. Now, that’s what I call pin-point market timing!
Immediate Short Term Outlook for $/£
Given the current chart of the Cable above, a number of conclusions can be reached concerning the path ahead.
While some pullback may be expected given the extent of the price extensions that we have seen over the past two weeks, the overall bullish outlook remains valid so long as Cable can now maintain 1.97 in the event of such pullback.
Overhead resistance is around 1.9940-46 which curtailed the late January rally and also last week’s move higher. A break above there is now needed for the bullish trend to resume.
This means that despite the broadly favourable outlook for the Cable, traders still in long spread betting positions should be mindful of any breach of price support. Alternatively, more risk-tolerant traders could look to initiate long spread betting positions if prices reach those price support areas in the next couple of trading sessions.
Key short term support levels to watch for: 1.9700–1.9720; 1.9645;
Key short term resistance levels to watch for: 1.9940-46; 2.0085–2.0110.
Of course, as things unfold, more time-sensitive analysis would be presented in the Market Timing Update
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