How far can Cable go?
15 August 2008
The Technical Trader’s view:
We have been short Sterling long Dollars in our Key Trades portfolio since 11th August at 1.9196. Since then the Dollar has strengthened mightily. But how far can it go?
QUARTERLY CHART:
The market has failed to hold above the 2.005 High from 1991.
Moreover, the supportive High from 2004 has broken.
The long-term case for stronger Sterling is under threat.
First long-term support lies at 1.7365.
DAILY CHART:
The detail of the market shows a number of alternative explanations for the sell-off.
It may either be a complex Head and Shoulders Top which completed two weeks ago.( Minimum move to 1.75)
Or a continuation Triangle which completed at the same time.(minimum move 1.84)
Each has a different measured move.
The triangle has almost achieved its measurable move. And the 61.8% retracement may be acting as good support at 1.8624 much as the 50% retracement @1.9115 forced a pause higher up.
But the significance of the medium-term chart breakdown suggests that, though there may be a pause at these levels, the market has no real support of consequence until 1.7375. We remain bears.
Mark Sturdy
John Lewis
Seven Days Ahead
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