Sunday, June 20, 2010

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Forex Tip :-
GBP/USD. Down but still trending higher

Cable (1.4807) is down overnight. It fell in European trading after having traded a new high since mid-May early in the session. Spot remains in an uptrend from the May low.


* Trend: Daily up; Weekly lower.

* Overbought/Oversold (stochastics): Daily neutral; Weekly oversold.

* Support/Resistance Levels: Resistance lies at 1.4886 (Jun18 high), 1.5524 (Apr15 high), 1.5816 (Feb17 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.4347 (Jun8 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).


* The CFTC, GBP, non-commercial, net-position fell to -74K, back towards the recent record short position. The market is ripe for a short-squeeze, although we’d caution that the largest net long position on record was 99K – the speculators have more “ammunition”.

* The risk reversal (3m, 25delta) is steady overnight but well above last week’s record low reading as spot attempts to rally.

* Implied Vol (3mo) is up overnight off a low since April.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive), S&P500 (positive) and crude oil (positive).

USD/CAD. Wedging lower in 1.02 – 1.04 range

USD/CAD (1.0304) is up slightly overnight but still trading lower highs even as the lows hold steady at 1.0225.


* Trend: Daily lower; weekly higher.

* Overbought/Oversold (stochastics): Daily neutral; weekly neutral.

* Support/Resistance Levels: Resistance lies at 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0225 (Jun14 low), 1.0110 (May13 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).


* The CFTC, non-commercial, net position slipped to 24.5K, at the low end of the uptrending channel it has traced out in recent months.

* The risk reversal (3m, 25delta) is up overnight and steadying as spot steadies after the decline during early June.

* Implied Vol (3m) is consolidating near the middle of it’s range so far in 2010.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), DXY (positive), CRB (negative), crude oil (negative), and the 2yr spread (negative).

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