By Fast Brokers – The Cable is undergoing an intense pullback today, dropping beneath all of our previous uptrend lines along with 11/12 lows. The Pound is getting hit by a report from Nationwide and an analyst poll from Bloomberg implying Britian’s housing recovery may be overdone and analysts are expecting a pullback in prices in 2010. These two discouraging news releases tack onto Wednesday’s negative Building Permits and Housing Starts data points from the U.S. Furthermore, the fact that yesterday’s British Retail Sales data printed two basis points below analyst expectations isn’t helping the Pound’s cause. Today’s bounce in the EUR/GBP highlights the relative weakness of the Pound, yet several near-term downtrend lines due remain on this major Euro cross. Meanwhile, the S&P futures have ventured back below their psychological 1100 level. Therefore, investors should keep a close eye on the S&P’s interaction with 1100 since the futures are normally negatively correlated with the Dollar. Any technically significant pullbacks in the S&P have the potential to impact the Cable with the possibility of extending the currency pair’s present pullback towards previous November lows.
Technically speaking, the Cable is currently stabilizing along what is now our 4th tier uptrend line. This is an encouraging development since our 4th tier runs through November lows. That being said, these November lows serve as the next noteworthy technical support should our 4th tier uptrend line give way. We’ve also readjusted our previous uptrend lines to give investors an idea of where important technical cushions lie. As for the topside, the Cable still faces multiple downtrend lines along with 10/29 and 11/20 highs. Meanwhile, it will be interesting to see how the Cable interacts with its psychological 1.65 area. Furthermore, investors should monitor how the S&P futures deal with their own psychological 1100 level since the futures are normally negatively correlated to the Dollar. Data-wise, investors will be paying close attention to Monday’s wave of EU Flash PMI data followed by Britain’s Inflation Report Hearings and America’s Prelim GDP on Tuesday. Tuesday’s data appears to carry the most weight for the Pound. Therefore, we should get a good idea of whether today’s setback is only temporary or signifies a more lasting trend.
Present Price: 1.6494
Resistances: 1.6540, 1.6578, 1.6606, 1.6634, 1.6664, 1.6694, 1.6730
Supports: 1.6489, 1.6457, 1.6432, 1.6412, 1.6383, 1.6364, 1.6327
Psychological: 1.65, November and Lows, 1.70
Market Commentary provided by Fast Brokers.
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