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Monday 9 June, 2008
This edition of Spread betting opportunities looks at the currency markets and assesses the short term outlook for the Cable (British Pound; $/£).
A snapshot of recent price moves in the currency markets
The chart of the Cable as at the end of Friday June 6, 2008 is presented below:
After hitting a low around $1.95, the cable staged a recovery in the last two sessions of last week to end the week at $1.9703, down 116 pips for the week as a whole.
Short term outlook for the Cable
Its erratic movements do not hide the fact that the Cable has been in a downtrend since hitting $2.0387 in mid-March. So, with our view of the medium term direction in place, the question is where next in the short term...
Notice that the Cable backtracked from its high on Friday at $1.9735—which coincides with the immediate overhead price resistance denoted by the blue line on the chart above. That is a negative factor that short term traders should not overlook. However, the underlying price momentum coming from the middle of the last week suggests that that price area will be crossed to the upside in the coming week.
Bottom line: From a technical perspective, the balance of evidence suggests further upside in the immediate instance. The upside target is around $1.98–$1.9830 or slightly higher. This is however just another short-term bear-market rally in the Cable. After there, price resistance is again likely to come in to play. Despite the near-term bounce, only a break above $2 is would undermine the medium term bearish outlook.
Cable price support levels to watch: 1.9505; 1.9350
Cable price resistance levels to watch: 1.9735; 1.98–1.9830; 1.9905
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