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Kate Stewart

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Change of heart on my part, it will be interesting to get another perspective,

Covered 2.0030 short this morning at 9973, now flat on spot. still hold the 9880 put and also this morning bought a 2.0100 1 week call for 25 pips. The price on that suprised me and indicates that the market is biased for lower, but I'm not sure if we are going from these levels or 1 more 2.0100/0200 test.

There is no doubt that on the technicals, (daily has definately rolled) cable is capable of a deeper correction lower, however home sales later today need to be above expectations as do durable goods tomorrow, If they are not then despite the extremes on all the majors the USD could still go down further.

Markets can often move much further than expected and we still have not tested the TL from the March 1995 1.6680 high currently around 2.0230/50

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John G

I would have to side with the test above prior to any retrace at this point. The technicals are still there after the slight retest that we saw this morning towards the 1.9975 support. Now trading higher above the 2 figure, you've still got future implieds that are pricing in the second rate hike. I would be inclined to watch for a break out above on sterling demand heading into the decision next week.

I like the call on 25 pips at this point, seems like a lot of traders are attempting to head off any potential downside correction way ahead of schedule.

Cable just touched the .50 fib from the 2.0132 high to this mornings 9954 low after the bad data,

However I think USD is going to have a hard time breaking below last weeks 1.2001 low on swissy, plus just below that we have a TL from the Dec 2004 low as further support around 1.1988.

I'm looking to short cable on another failed 2.0040 test with stops above 2.0070 alternatively wait for the .618 @ 2.0063

Edit : Gone long at 2.0002 targeting 2.0060-2.0130 tight stop at 1.9984

Cable getting held down by EURGBP this afternoon. that pair now just testing the .786 also o/b on the hourlies, looking for that to pullback a bit to work the o/b off which should help cable higher assuming the USD doesn't do an about turn, Gold has pulled back quite a bit from the highs earlier but that just looks like an aversion to the $700 rather than a USD related move.

Equities still headed higher today despite the bad housing numbers, DJIA is really gunning for that 13,000 level but in my view there will be a lot of people taking some profit if/when we get there so it could pullback, any further deterioration in the US data tomorrow could be the start of a larger corretion in the indices, that in turn will cause further carry unwinds, just something to consider, bearing in mind the level of spec GBPJPY longs still out there which will have an effect on cable.

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John G

Morning.

Well the Hong Kong and Tokyo guys have been having their fun again with that last push

Not sure how much more topside there is on cable, I just covered the 2.0002 long and reversed short @ 2.0057 position is 2/3 the size of the 2.0100 call so no stop on that at present and open target. I was talking with a colleague last night who does lot of work with Delta's and potentialy we have a high coming in today and then down for an mtd low around the 15th May. That would sort of tie in with where the charts are and the USD general position, Dollar index at extremes agaain and could do with a relief bounce, eve if it's of the dead cat variety.

Have to wait now for the UK GDP and see what that does. also IFO which if stronger could help push EURGBP higher and in turn take cable lower

Anybody else trading cable at the moment ?

Edit : covering the bases, taken a 1.9940 put for 39 pips expiry 4th May

I know many of you don't/can't use currency options but you can also hedge by using the crosses. One of the Analysts has started a thread on that in GBP crosses which is worth a read I think

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John G

Sounds like a great straddle you got going....

I've found that GBPJPY is great hedging cross for the major spot, it takes the shift out of the sterling at odd hours of the night, limiting any losses that may go against you.

Looks like an interesting set up with the lower trendline support coming in at the 1.9950 to the lowside. The 200 hMA should offer some formidable support before a plausible break lower. Either way, the technicals are showing plenty of underlying strength for the pound to break higher, testing the 2.0150 4/18 session high.

Likely Catalyst?

http://www.dailyfx.com/story/special...442412346.html

Attached Images

 

It's very quiet in here.

Well first set of US numbers out today pretty healthy, have to see now if the housing at least meets the improved expectations. If they do then I think we will be visiting 9950 before close today, If they are bad then could well see 2.0130's again but personaly I think that will hold any topside today.

We have some pretty hefty macd divergence on the weekly chart which I am definately keeping an eye on. One more pop up this week would give us a nice shooting star.

Who knows, I'm just thinking out loud here Any other views ?

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John G

Richard,

Can you give an example of how/when you would use this hedging strategy (presumably you mean hedging cable against geppy?).

Thanks Richard,

I still do use GBPJPY as a hedge, usualy for a news release, any big move on USD and hence cable is offset by the USDJPY move.

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John G

Hi JohnG

I'm currently short cable and EUR/USD

Happy to play the long game with EUR/USD and add further up as holding interest is positive. Cable I have a 9860 target which may take a while.

Like you say, the previous news helped and maybe housing will too. I'm running on the principle that theres plenty of downside potential in these pairs, even if is temporary.

I'm not calling a top in EUR/USD, just calling a 'top zone' from which I will start selling. Same with cable.

I agree that it could go down to 1.9950 but right now it seems to be going up. Until it breaks 2.0060 and beyond, I will still be looking to short.

Yes have to agree gentlemen, cant believe ppl are licking their chops buying the dips at these levels. Must be momentum funds, CTA accounts. The ones that wait for confirmation, when the Bears decide to take their stand those initiating right now are gonna get creamed.

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"perception is the measure of evolution"
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Andy K

Just out of curiosity, any reason to sell short the British pound at these levels. Granted the technical outlook does purport some short side bias, but fundamentals tend to reflect the other way? Possibly a better price following the Bank of England rate decision in two weeks?

Well there has been talk of some speculators taking the bid side ahead of next week's data, although the schedule is running pretty thin. Overriding theme right now is the underlying bet that rates may be increased b 50 basis points. I wouldn't be surprised if positions were pared back shortly after the decision in two weeks. Although futures are still pricing in the likelihood of a rate hike after the upcoming May meeting, the actuality may not be realized till well into the third quarter.