Good selling has come into the pair after rallying above Friday’s high. At the time of writing, cable looks destined to close below Friday’s low, therefore printing a bearish outside day reversal. The various oscillators are not suggesting a major correction in the pair is coming anytime soon, but the reversal after a strong move from $1.4951 could be the start of something more negative.
Overnight we saw a new all-time low of NZ$1.0332, but the pair has since recovered somewhat and traders are keen to see if the pair can close (09:00 AEDT is the New York close) below the prior low of NZ$1.0355. If this materialises, then the natural target would be parity. However, the daily candle is shaping up to be quite positive. Still, there is no denying the technical picture on the daily chart is looking quite bearish.
I suggested short EUR/GBP positions on 10 February at £0.7480 but the pair failed to achieve that level, hitting a high of £0.7455. The trend is weak and continues to print lower highs, which can be best seen on the hourly chart. The close below the 25 January low of £0.7405 seems important and short positions are widely preferred. EUR/GBP is a good way of hedging concerns around Greece as fixed-income traders will be rolling European fixed income exposure into UK gilts (bonds), which in turn will create upside potential in the pound.
Strong bids have been seen around CNH6.24 and the pair has seen a strong move higher. A break of the February high of CNH6.2897 could be on the cards. This would be very interesting as it implies speculators have a strong conviction that the People’s Bank of China are likely to weaken the CNY after the New Year holiday. For those who like trends, this pair is one for the radar.