Cable Cross Rallies Look Corrective


GBPJPY – The GBPJPY turned down from the 233.00 figure but rebounded late yesterday and today. A continuation of this rally to above 233.05 with focus on 233.70 (61.8% of 241.52-221.10) would complete a 5 wave move from the 221.10 low. The rally from 221.10 has taken on the form of a diagonal triangle (wedge). Looking at the longer term chart, we still favor another leg down to complete at least a 3 wave correction from 241.54. That said, GBPJPY could extend to the 78.6% of 241.52-221.10 at 237.12 before the next leg down begins.

GBPCHF – The GBPCHF is also tracing out a corrective pattern following the January – early March sell-off. The pair has held the 200 day SMA but the rally off of the low at 2.3291 is in just 3 waves, which keeps the structure bearish. A rally above 2.4012 negates the bearish bias and could lead to an extended rally towards the 61.8% of the 2.4763-2.3291 decline at 2.4200. Similar to GBPJPY, we are treating the rally off of the low as a 2nd wave within a larger 3 wave correction (A-B-C). We’ll be looking for a reversal near the mentioned 61.8% at 2.4200 or the 78.6% at 2.4445.

GBPAUD – We remain bearish following the break of the longer term trendline support two weeks ago. Recent consolidation may be a 4th wave that will lead to one more leg lower in a 5th wave with support at the April 2006 low (2.3671). Even though daily RSI recently crosses above the oversold level of 30, we expect another low to create divergence before a bigger rally attempt occurs. Resistance is at the 3/21 high of 2.4539 and the bearish case is strong with price below the 2/22 low at 2.4664.