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For Monday 7 July, 2008
This edition of Spread betting opportunities assesses the likely path of prices in the Cable ($/£) over the short term trading horizon.
A look at recent price action in the currency markets:
On Friday 13 June, the Cable ended at $1.9484 and the chart of the Cable looked like this:
That weekend, I sent out the Monday 16 June edition of the Market Timing Update. In that edition, I concluded the analysis for the Cable by stating that:
“...in the immediate instance, a bounce in the Cable is highly likely from the current price area...This is because of the potency of the price support area around $1.94 and the implication of the breach of that support for the Cable.”
Two weeks later, the Cable was trading well over 450 points higher! On Friday 27, June, the chart of the Cable looked like this:
Just as the cable was hitting its short term peak, on Sunday 29, June, I sent out the Monday 30 June edition of the Market Timing Update. In that edition, I concluded the analysis for the Cable by stating that:
“From a technical perspective, the indications are that in the immediate instance, we are likely to see a pullback in the Cable... This would be positive for the bulls as it would remove some of the overheating out of the recent price gains.”
At the time of writing this, the Cable is trading about 130 points lower than it was when that market outlook was published (Sunday 29, June).
Short term outlook for the Cable
The chart below shows the last nine months of price action in the Cable up to the end of Friday July 4, 2008:
As things stand, the technical evidence indicates that the pullback is still in process and we should see further price declines in the next session or two. However, the evidence suggests that such a pullback should be only temporary, providing opportunities for entry into new long positions in anticipation of a move to $2.0180–$2.0250—perhaps over the next couple of weeks.
Bottom line: the anticipated pullback is ongoing. A move to $1.9750–$1.9720 (or just below) is likely to contain the decline. Unless we see a break below $1.96 in the Cable, the move higher is likely to resume, targeting $2.0180–$2.0250.
Do you want to know what to look out for in the Dow in the trading sessions ahead?
Detailed analysis for the Dow, Footsie and Cable are presented in the latest edition of the Market Timing Update.
Make sure you check it out!
Cable price support levels to watch: $1.98–1.9750; $1.9690–60; $1.9600
Cable price resistance levels to watch: $1.9980–$2.00; $2.0180–$2.0250
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