Cable Crosses Correcting Initial Bear Leg


[B]Commentary [/B]- We wrote last week that “it is likely that an expanded flat is unfolding from 238.29. Near term, price is likely to exceed 242.91 and test 244.35. We will look for a top and reversal at the 244.00/246.50 zone.” The GBPJPY reversed at 244.07 yesterday afternoon and the rally currently unfolding should prove corrective. A correction is underway following the decline from 244.07 to 239.00. Preferably, we would like to see a c wave unfold towards the 61.8% of 244.07-239.00 at 242.13 before the next leg down. The a-b-c correction scenario is shown on the chart. A break under 239.00 would suggest that the next leg down was already underway and that the rally from 239.00 to 241.41 was a-b-c.
[B]Strategy[/B] - If already bearish, remain so, if not then look to get bearish near 242.12 against 244.07, targeting below 237.61.

[B]Commentary[/B] - The GBPCHF looks similar to that of the GBPJPY. That is, the longer term bearish scenario is best served by a rally through 2.4339 before the next leg down. This would complete an a-b-c correction from 2.4202. 2.4380 should remain intact in order to keep the short term bearish bias favored. The medium term / longer term bearish bias is favored as long as price is below 2.4574.
[B]Strategy[/B] - Longer term, remain bearish against 2.4963, target below 2.3288. Shorter term, bullish potential ends at 2.4632/2.4710, look for a top and reversal in that zone.

[B]Commentary[/B] - We wrote last week that “we see potential for a rally to 2.4287 to complete wave c of an expanded flat.” After ranging for most of the week the pair is in the early stages of wave c that should carry towards 2.4287. This is also close to where wave c would equal wave a (at 2.4353).
[B]Strategy[/B] - Flat

[B]Written by Jamie Saettele, Technical Currency Strategist[/B]