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BHP moving into key sell zone

Five markets in focus today: BHP Billiton, EUR/GBP, GBP/AUD, CAD/JPY and Japan 225 Cash.

BHP Billiton
Source: Bloomberg

BHP Billiton

Aside from the rally we saw in February (with BHP hitting a high of $39.79), BHP has struggled above $38.00 since January 2013 and shorts have been prevalent between $38.000 to $38.50. BHP should firmly be back on the radar given the stock is moving back into the key sell zone.

EUR/GBP

On June 17 I suggested a potential trade idea for shorting EUR/GBP. It has now traded down to 0.7920 (from 0.8030). However, the trend is lower, and with this a potential strategy would be to re-initiate short positions at slightly higher levels, as the chance of short covering this week is high. I could potentially work offers in the pair around 0.7960, just under the 38.2% retracement of the recent sell-off from 0.8034 to 0.7919.

GBP/AUD

UK data has been solid recently, but with industrial production and Australian jobs data on Thursday I feel we may see some profit-taking in the pair this week. Pullbacks to 1.8250 could prove to be an area where buyers step back in. I retain a long bias on GBP/JPY at 173.55 and feel having sterling exposure is still warranted.

CAD/JPY

I feel raising stops on last weeks ‘one to watch’ (CAD/JPY) to 95.60, just under the short-term downtrend on the hourly chart, could be warranted. This week I will also look at short AUD/CAD trades in ‘one to watch’ on signs of divergence at a central bank level.

Japan 225 Cash

Friday’s daily candle highlighted indecision from traders, with the bulls not quite having enough impetus to push the index above the June 20 high. The index is one of the best performers of late, having rallied 11% since May 21. Long positions are preferred, however on the daily chart there are signs of divergence between price and the RSIs (or stochastics) and this could be a signal that a reversal is due.

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