FaithMight

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  • The Week Ahead In Charts

    After a week of consolidation in sterling, GBP pairs are a mixed bag as this new trading week gets underway.

    GBP/USD

    Though $GBPUSD has moved off its recent multi-year highs, it has been a volatile and choppy ride lower. Expect more of the same again this week, as this pair continues to correct lower towards 1.6500. I believe big time buyers are set up all around 1.65 between the 50% and 61.8% Fibonacci retracement levels. A move from these levels supports a rally to 1.7000 mid term.

    GBPUSD DAILY CHART

    EUR/GBP

    The $EURGBP spent all last week struggling at the 0.8250 level. On Friday, however, price broke above 0.8250 and held the level to close the week. While the daily chart is in a clear downtrend, price is holding support at the weekly chart’s 61.8% Fibonacci retracement level. This correction has the potential this week to continue higher to the zone between 0.8330 and 0.8350. From here, it will be decision time. But the odds are with the bears as GBP could catch another bid and push price back to lows.

    EURGBP DAILY CHART

     

    GBP/CAD

    While $GBPUSD and $EURGBP consolidate, the $GBPCAD price action has remained bullish . Candaian fundamentals keep the $GBPCAD well supported on dips. Dips due to GBP weakness have been bought below 1.8500 as CAD fundamentals continued to deteriorate. For some reason the Canadian economy is falling into recession even as the US, its largest trading partner, has remained robust. This pair will continue to have issues getting higher as long as cable is weak. Once $GBPUSD starts to show strength again, the $GBPCAD should find conviction higher again.

    GBPCAD DAILY CHART

    GBP/NZD

    The $GBPNZD has remained very bullish closing the week above the almighty 2.00 level. As the $GBPUSD continues its consolidation lower, there is major positioning occurring at this major psychological level in $GBPNZD. It has been a whipsaw at the highs but as long as the overall GBP bull trend remains in place, this pair is poised for 2.05 mid term.

    GBPNZD DAILY CHART

     

    GBP/JPY

    The $GBPJPY has remain elevated as equity markets bounced higher to the 2014 resistance levels. This week, all eyes on US stocks and emerging markets as 2 wars ended this weekend. The stage is set for risk to rally higher as geopolitical events turn towards peaceful resolution. As $GBPJPY opens this week above 170.00, the bullish sentiment favors buyers even as the trend still remains corrective below 175.00.

    GBPJPY DAILY CHART

    All these charts suffice it to say that sterling is smoking hot. A trend that can correct is only headed higher. And a trend that holds up during consolidation has the makings for a major breakout. $GBPUSD is the pair to guague timing in the GBP crosses during this time of consolidation. Once major levels are reached in cable, sterling may rock out across the board once again. Or not. Price will ultimately tell.

    Disclosure: I am long $EURGBP as of this writing since last week.

  • Sterling Digest, 13 February 2014: phase two

    Mark Carney, Governor of Bank of England
    The honeymoon is over

    Bank of England Governor Mark Carney delivered the long awaited Inflation Report after “scrapping” forward guidance just a month ago. What Carney gave is what some are dubbing stronger guidance. He recognized and upgraded the UK economic recover and then added more indicators to produce “Forward Guidance – Phase 2”. Whatever you want to call it, the markets liked it and sterling rallied hard across the board. The rally continued even during the Asian session as those traders got the opportunity to digest the Inflation Report and Carney’s remarks. Now with sterling at key resistance levels, does it have the strength to go higher? What’s even more interesting to watch is if sterling can continue to rally in the face of a dovish BoE.

    Image credit

     

  • Is This Euro Rally For Real

    It surprising to see the euro’s positive reaction to Draghi’s oration. There are pundits that like to speak about President Obama but he has nothing on our resident ECB Governor, Mario Draghi. After leaving monetary policy on hold, Draghi reiterated low interest rates and hinted at a cut or QE depending on data. And yet, the euro rallies. With an approving nod toward low inflation benefits on wages and recent positive economic developments, Draghi gave this budding euro rally some fresh legs to stand on.

    EURGBP weekly chart

    The weekly chart is a clear downtrend but this 61.8% Fibonacci retracement level has turned out to be a big deal right now. It was hard to get long earlier this week knowing how dovish the ECB is. But today’s positive reaction, really fits the technical outlook for a rally to 0.8600. A Friday close above 0.8300 would be very bullish also. Near term targets to contend with for any type of material trend reversal to occur lay at 0.8350, 0.8400 and 0.8500.

    Listen to more $EURGBP analysis here.

  • Time In The #FXRoom

    Yesterday, I had the pleasure of chatting with Dale Pinkert, host of FXStreet’s Live Analysis Room. We talked markets and, of course, all things GBP.

    Video streaming by Ustream

  • New Month, New Week, New Attitude

    It’s the first week of a new month in a new year. We will get a new attitude from a Bank of England that has scrapped its new forward guidance policy after less than an year of implementation. This action makes this week’s rate decision all the more interesting.

    In the mean time, we have a slew of PMI data before Thursday. A disappointing manufacturing PMI number kicked off the week. With a miss to start the week, it could be very likely that data disappoints in construction today and service tomorrow. Trading yesterday took sterling to key swing levels in all the major GBP currency pairs. Price moves this week could start a trend. Here is where we stand ahead of today’s release.

    EURGBP 60 MINUTE CHART

    GBPUSD DAILY CHART

    GBPJPY WEEKLY CHART

    GBPCAD DAILY CHART

    GBPNZD DAILY CHART

    Long overdue for a correction, GBP could easily be a great buy or sell deeding on the market’s reaction to PMI data and the BoE this week.

  • Sterling Digest, 23 January 2014: threshold not target

     

    If you repeat it enough, the market will listen. At least that is what the Bank of England is hoping. The UK sits 0.1% away from the unemployment rate threshold at which forward guidance dictates that their central bank would start to consider raising rates. But markets have thrown the word consider aside to side and are breaking out with volatility. With the GBP ripping across the board and the $FTSE falling lower, you have to believe that all the markets are trading on new rate hike expectations when just 12 months ago we were talking about raising quantitative easing. This hawkish change in sentiment is certainly a fundamental change that even technical traders are paying attention to.

     

  • BLAME THE KIWI

    The forex markets are super thin right now. Even though news just dropped out of New Zealand CPI, the liquidity in the air has disappeared.

    Spreads have widened across the board signaling thin market conditions. I got my $GBPNZD orders out of there in a hurry. With US off today and still 45 minutes before Wellington and Sydney open, the sidelines is the best view in kiwi.

  • GBP/CAD At A Crossroads

    This week has the potential to be a pivotal for the $GBPCAD. The currency pair has enjoyed a massive breakout from historically lows to the 1.80 highs. This big psychological level has derailed the steam of the bulls it seems in 2014. The $GBPCAD has been rangebound between 1.80 and 1.78 for all of 2014. With the release of Bank of England meeting minutes AND the Bank of Canada interest rate decision on the calendar this week, it seems almost obvious that traders would buy $GBPCAD ahead of these releases. In fact, $JPM has issued this call today:

    That has me very wary. To back that wariness is the RSI divergence evident on both the 4-hour chart and the daily chart.

    GBPCAD 4 HOUR CHART

    GBPCAD DAILY CHART

    The continued failures above 1.80 combined with the bearish RSI divergences on these charts actually provides a really good opportunity for swing sellers. A price move lower targets the bottom of the range around 1.7830/00. However, I’d expect buyers to step in at those levels too. Depending on how the central bank news falls, the $GBPCAD has ample opportunity for both bears and bulls this week.

  • Sterling Digest, 15 January 2014: WTF

    TIME magazine cover of new Fed chairman Janet Yellen
    Until her 1st meeting in March, USD may hijack the markets with uncertainty

    These 1st 7 trading days have been a nightmare for me with sterling. SHEESH! The market pushed to highs and lows and yet still remains rangebound. The volatility, too, has been intense as players jostle for position in the year open. Nobody wants to miss the monster rally of 2013. Both bears and bulls have been shook out and made money. It hurts but there still a lot of new year left. It is important to admit to the pain, analyze mistakes and make the next decision. Timing has needed to be perfect and fearless. Yet this is always easier said than done. A $GBPNZD short at 2.00 was a beautiful opportunity but the volatility on NFP day shook me and faked me right out of the trade. Other traders have been sharing similar frustrations in the market. Thankfully, there are others still who are seeing very clearly and their shares have been a guiding light to (some) clarity. That is the beauty of the market…and the stream.

     

    (Image credit)

     

  • Disney Builds Its Exposure to Africa

    When media boss and former human resources manager Mo Abudu launched EbonyLife TV in mid-2013, she boasted that the Afro-centric platform would air more than 700 hours of original content in its bid to capture a global audience. The channel has now partnered with Disney to produce an African version of hit series Desperate Housewives, set to debut in 2014.

    Recognized as one of the top 5 people to watch in West Africa, Mo Abudu introduces the Walt Disney Co. to business with Nigeria rather than just in Nigeria. And as such, I have added $DIS to my watch list for 2014. $DIS stock has been trading at all-time highs for the past 2 years. Wow! While many traders will cite all kind of technical and fundamental reasons, I can only see now that Disney recognizes what I’ve known for a very long time: African media is ripe for growth. Nollywood is 2nd only to Hollywood in the worldwide film industry. And they want in in. I like this partnership. It makes me like the $DIS stock as the company is building on its momentum in Africa and gaining trust in Nigerian businesses.

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