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Trader News Trader Views 12th August

John — Fri, 12 Aug 2011 09:15:59 +0000

12th August 2011
Currency overview
Focus on the Cable (GBP/USD)

Cable has broken lower over the past few sessions as the Dollar has seen a safe haven bid during the turmoil that currently engulfs the markets, breaking back below the Head and Shoulders neckline that has dominated the picture over the past few months.

Thoughts from the trading floor

Monday saw a retest of the recent highs in Cable with the contract opening around 1.6475 and then selling off hard throughout the day. Since then the market continued lower, falling through the 1.6220 area which has acted as good support over the past two weeks, and is now where the neckline comes in. We broke back below this neckline on Wednesday but have since bounced back and are trading around it this morning. This area looks like becoming an important pivot point for the market once again.

Thursday’s low at 1.6107 is now important short term support for the market, having bounced quite impressively from here. A break and close below this point would be a bearish signal and should result in further selling of Cable. For now though this looks to have put a low print in the market and a move back into the trading range of the past two weeks is the most likely scenario.

The medium term outlook is again going to be dominated by the trade in the Dollar. During the chaos that has encapsulated the markets in August the Dollar has generally seen a slight bid against some of the riskier currencies, such as the British Pound and the Euro. These trades have generally been in line with the moves in equity markets. If the equities have made a low for the time being then expect some buying to come back into Cable, with another test of the 1.6475 being the first major target.

Bull View

Although Cable has sold off while the equities have seen big moves lower, Thursday saw an impressive bounce from 1.6110. A move back into the recent range and the bulls will try and target the recent highs soon after.

Bear View

After an impressive sell off the bears have let the market bounce back up above the neckline. A close below 1.6260 would allow the bears to try and retest Thursday’s low.

Futex View

If the market can close above 1.6260 today then we expect a move back into the recent range. Though we will be keeping a close eye on the equities. Any selling there will see Cable dip as well.