AUTOREFRESH 
Cable sell-off accelerates; Middle East names selling
By Gerry Davies || July 7, 2009 at 06:37 GMT
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Cable has dipped below 1.62, triggering stops which appear to have been limited and hitting a session low 1.6189.
Sources report good selling coming from Middle East names on this latest move lower.
From here technical support lies at 1.6180 and there are reports of more stops just below there.
There are said to be bids in EUR/USD at 1.3900/20 and this may lend cable some much needed support.
is this cable sell off ever gonna stop? what are we factoring in?what is your prediction and what does the technicals say?
biggest problem for sterling bulls is proximity of boe meet later in week and possibility they’ll signal further qe. that said, qe of 25 bln and no indication of further to come is likely to be already partially discounted . ahead of that there is todays release of ind prod to overcome. i’m not really a huge technical analyst, but short term picture seems to look a little negative, medium term still fairly constructive.
any of our more technically adept readers please feel free to chip in with their views on cable charts
Bunty – FWIW, this morning’s failure to break back and hold above 1.63 gives Cable a bearish hourly bias which is likely to be exacerbated should we see an hourly break and close below yesterday’s low. So this hour, ADX DI- is rising, ADX DI+ is falling with the MACD about to turn -ve. The 1% NDC is at 1.6166 with the 2%, being the last level of support before yesterday’s low, at 1.6109. These hourly support levels will change as time ticks on but not by too much as interestingly the Bollinger Bands are surprisingly flat. This would suggest that we are unlikely to see a break out right now and so close attention to those support levels would be advised. One other interesting indication is seen with the MACD which appear to show the rally back appeared to have more strength than the fall. All told, until there is a break back above the July hourly trendline, the pressure remains to the downside.
Looking at the daily chart, it would appear that the bottom of range seen since the 9th June is under scrutiny and this is being coupled with a vicious squeeze on the Bollinger’s signalling a probable sharp move sometime soon. If the range holds then we’ll see a bounce back. Daily supports lie at 1.6185 then at 1.6109 (yesterday’s low) with resistance at 1.6416. If there is a break lower then is quite likely that we’ll see a drop to 1.5884. This level I’ve taken from the May and June highs and created a channel from 8th june swing low.
Looking at my brokers long short historical position ratios, there are more shorts than longs in Cable and these positions are increasing. Usually one would prefer to buck the retail traders net positioning but when in a range, retail traders tend to get it right as ranges are fairly clear cut (bar the odd head fake … like yesterday’s move lower?).
GBP historical position ratio:-http://img2.pict.com/c7/33/46/1076368/0/gbpusdlsratios.png
Bunty – It’s an inside day so far so it gives us a clear reading as to where support and resistance lie. Pressure is to the downside now (we can all see that) but that’s not to say it’ll suddenly open full throttle and speed to the downside. However well worth watching yesterday’s high and low as breaks could signal direction for the next couple of days. Really, Gerry nailed it with the BoE factor being the likely cause of this pressure which is unlikely to alleviated until after Thursday’s IR decision.
My thoughts…..Interesting to see if yesterday was a case of break it down to break it out at the end of the week……It has a strong semblance to the us equities at the moment…..this is tough trading at the moment …..with intraday wideranges….But If I was a betting man
….I think the market tipped its hat thursday in the usa…….large drop no volume (wall street) and the data released globally early in the week was very average indeed.
Unless of course there is major distribution taking place , I think the major holder’s don’t won’t to offload their lower level entry taken over the last 3 month’s unless there is a major event , can’t see it…….as gerry says the gbp is a proxy for financial health….. even if that sector and equities range as a whole through the earning’s they won’t offload the major levels of gbp in a hurry.
I’m just playing intraday levels, meaning, I flatten out each day,30-60-100 parts, until the next move on a daily scale.
The hammer candle at 9 AM BST was quickly followed up by another 2 hrs later with the 1% NDC doing a sterling job holding fort. ADX is now into +ve territory but MACD has yet to x-over. 24 hr MA is holding off further gains here with the all important t’line yet to be troubled. A mixed picture but at least it doesn’t look so dire as it did this AM … There’s 3 in the bed now though what with the US having joined the fun