British Pound Crosses Seriously Diverge
By DailyFX – GBPJPY * GBP/JPY has rallied nearly 400 pips since last week, testing and briefly puncturing the 2/2 high of 211.17. The… … pair has broken out of its large symmetrical triangle that has been forming since mid December 2005, which is quite bullish.
The pair has also broken the resisting trendline on the weekly chart (pictured below).
A weekly close above would improve bullish prospects. This view is consistent with
the long term wave sequence that we wrote about last week as well as rising, bullish
oscillators on the daily. However, additional strength would still contest with
the 12/13 high at 213.00. A fall back into the range finds support at the 38.2%
fibo of 205.39-211.25 at 209.03. Also, remember two weeks ago, we presented that
“breakouts typically occur between two-thirds to three-fourths of the way through
the triangle. This gives us dates for a potential breakout anywhere between 5 and
one-third to 6 months after 12/12/2005 * or 5/24/2006 to 6/12/2006”.
GBPCHF* GBP/CHF is the poster child for ranges. Every once in a while, it will
spike 100 or so pips above its 2.2915 resistance or fall below its 2.2570 support,
but 2.2915-2.2570 is the predominant range. The pair most recently bounced off of
2.2915 on 5/19 and 5/17. The short term outlook is slightly bullish due to an
upward sloping channel that began in the beginning of April, thus scope remains for
yet another test of 2.2916 (150 pips away). Initial support is at the 5/24 low of
2.2670.
GBPAUD * GBP/AUD reversed at 2.5124, a bit higher than the 2.4969 price that we
designated as a possible turning point last week, but still accurate to six-tenths
of one percent. The pair has already fallen over 400 pips, which shouldn’t be a
surprise considering that its ATR is 243. Oscillators have rapidly turned bearish
and momentum is just crossing below 0. Projecting out a possible channel for the
future path of GBP/AUD gives us some clues as to where this pair may go next (see
chart below). A retracement to the 61.8% fibo of 2.3665-2.5123 at 2.4224 intersects
the projected support line on 7/8, the 50% fibo of 2.4394 intersects on 7/29 and the
38.2% fibo intersects on 8/19. Taking into consideration the volatility of this
pair, the 61.8% and 50% fibos, as potential corrective levels, are likely the most
probable. This is of course a possible path of future price action * and by no
means is it definite or not subject to change.
Jamie Saettele
Technical Currency Analyst
Forex Capital Markets LLC
New York, NY 10005
Tel (212) 897-7660
Fax (212) 897-7669
Toll Free 888-503-6739
jsaettele@dailyfx.com