GBPUSD TECHS: Bull Cycle Remains In Play
- RES 4: 1.2643 High Sep 4
- RES 3: 1.2589 50.0% retracement of the Jul 14 - Oct 4 bear leg
- RES 2: 1.2583 2.0% 10-dma envelope
- RES 1: 1.2506 High Nov 14
- PRICE: 1.2415 @ 06:19 GMT Nov 17
- SUP 1: 1.2314 50-day EMA
- SUP 2: 1.2187 Low Nov 10 and key short-term support
- SUP 3: 1.2138 Low Nov 2
- SUP 4: 1.2070 Low Oct 26
A bull cycle in GBPUSD remains in play. The pair rallied sharply higher on Tuesday to confirm a resumption of the uptrend that started Oct 4. Resistance at 1.2428, the Nov 6 high, has been breached and note that price is also through 1.2459, 38.2% of the Jul 14 - Oct 4 bear leg. This opens 1.2589 next, the 50.0% retracement point. Firm short-term support is at 1.2187, the Nov 10 low. A short-term pullback is considered corrective.
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UK DATA: Inflation upside surprise at least partly driven by transient factors
- Looking at the key drivers of the CPI inflation beat, it does seem to be the components that were highlighted in the previews that have provided the upside surprise.
- Transport the biggest upward contributor (adding 0.17ppt to the overall CPI Y/Y print). Part of this is due to airfares, the rest due to higher petrol prices.
- Also restaurants and hotels added 0.05ppt - this was something that was lower than expected in the August data so has shown some bounceback.
- So it looks as though the main driver of the surprise at first glance looks like at least partly due to a reversal of the transient factors that we saw in last month's data.
- We noted in our preview that if the drivers of a beat were due to a reversal of these transient factors that although we may see GBP FX move higher, we may not get a sustained rally through the day - and the moves may not be backed up when SONIA / gilt markets open.
EURJPY TECHS: Approaching Next Resistance
- RES 4: 160.36 2.382 proj of the May 11 - 29 - 31 price swing
- RES 3: 160.00 Psychological handle
- RES 2: 159.76 High Aug 30 and the bull trigger
- RES 1: 158.65 High Sep 13
- PRICE: 158.51 @ 07:17 BST Oct 18
- SUP 1: 156.46/154.46 Low Oct 6 / Oct 3 and the bear trigger
- SUP 2: 153.39 76.4% of the Jul 28 - Aug 30 bull run
- SUP 3: 151.42 Late July Low and Bear Trigger
- SUP 4: 150.00 Round number support
EURJPY is firmer but continues to trade inside its range. Resistance to watch is 158.65, the Sep 13 high. For bulls, a break of this level would highlight a range breakout and expose the key resistance and bull trigger at 159.76, the Aug 30 high. On the downside, key support lies at 154.46, the Oct 3 low. Clearance of this level would strengthen a bearish case and open 153.39, a Fibonacci retracement.
EUROSTOXX50 TECHS: (Z3) Bear Cycle Remains In Play
- RES 4: 4388.00 High Aug 30 and reversal trigger
- RES 3: 4359.00 High Sep 15 and key resistance
- RES 2: 4300.00 Round number resistance
- RES 1: 4246.50/4256.00 50-day EMA / High Oct 12
- PRICE: 4169.00 @ 06:48 BST Oct 18
- SUP 1: 4082.00 Low Oct 4 and the bear trigger
- SUP 2: 4055.40 76.4% retracement of the Mar 20 - Jul 31 bull cycle
- SUP 3: 4034.00 Low Mar 24 (cont)
- SUP 4: 4000.00 Psychological round number
A bearish theme in Eurostoxx 50 futures remains in play and last week’s reversal from 4256.00, the Oct 12 high, signals the end of the recent corrective cycle. Note too that resistance at the 50-day EMA, at 4246.50, remains intact. A clear break of this average is required to signal scope for a stronger correction. The bear trigger lies at 4082.00, the Oct 4 low. Clearance of this level would confirm a resumption of the downtrend.
