Thursday, March 28, 2013

British Pound

It's been a few days since my last post so let's take another look at the British Pound June futures.  We saw 3 days of selling followed by a bounce back up today.  The current short term uptrend is still in place and today's close got us back above the 10 and 20 DMA.  If we take out the recent 3-25 swing high of 1.5260, then we will have back to back ABCD patterns with higher highs and higher lows.  The next target area will be 1.5400.

Friday, March 22, 2013

British Pound

The head & shoulders bottom pattern got confirmation today with a close above the neckline.  We also got a close above the 20 DMA yesterday for the first time since January 10th.  Let's see if we can get follow through next week or if the bearish momentum returns.  One other piece of supporting data that I forgot to mention on Wednesday for some upside action comes from the COT data.  Commercials are approaching extreme longs, which is bullish.  Small traders are at 8+ year shorts, which is bullish.  Another thing worth mentioning is that large traders are a record net long the Dollar Index, which is bearish.  The Dollar Index has been on a nice rally the past month and a half.  We could see some dollar weakness the next week or two, which could be good for some of the other currencies like the Pound.

Wednesday, March 20, 2013

British Pound

The British Pound could see a correction bounce in the days and week ahead.  This market has gotten crushed since the start of 2013.  There is fundamental factors at play here, but the technicals are lining up for a possible bounce. 
First, a potential head and shouders bottom is forming with a close above the neckline needed to confirm this pattern.  A close above 1.5181 should do it. 
Second, the market is in oversold territory and shows bullish divergence on the RSI.  You also have a bullish crossover on the MACD.
Third, an engulfing candlestick pattern formed on the weekly chart, a hammer on the daily chart, and an engulfing on the daily chart.  All formed at the monthly S1 pivot.
Fourth, you had a bullish ABCD pattern form today with shallow retracement and right handed skewing. 
Fifth, you saw a close above the 10 DMA 5 days back and it's held since.  Next up is to close above the 20 DMA, which has been resistance the past few days.  It hasn't been above since early January.

Targets: the H&S objective is around 1.5550, which coincides with the 361 fib extension off the ABCD pattern and the 100 DMA.  First resistance should be around 1.5390, which is the 261 fib extension of the ABCD pattern and the 50 DMA.