24 July 2009

GU analysis:
Both Dow Jones and S&P500 continue their rally with better than expected earnings. This lead to a continued weakness in USD and YEN.

The pound began its climb with the better than expected results of its retail sales. It further took advantage during US market with better homes sales (jumping 3.6%) and the rally in the equity market. It hit day high of 1.6586.

Today we have one very important news UK GDP released at 1630SGT. The most recent indicators have pointed UK with improvements in business surveys while the housing sector has also shown clear signs of improvement. However, Bank Governor Bean commented on Wednesday that the GDP report would almost certainly be negative.

From the daily chart, sterling did a double top formation. The 1 hour chart showed a dispersion into EMA21. From the 30min chart, it has a head and shoulder formation. From its high yesterday, sterling has retraced below from where it has broken out at 1.652, suggesting that 1.652 failed to form a support for sterling to climb higher.

Support is at 1.638, which happen to be EMA200 for the 1 hour chart and the EMA21 for the daily chart. This will be one critical support before breking lower to 1.620.

The only positive technical is that CCI has not reversed. Resistance is at 1.663, provided it clears yester high at 1.658.

Trend: down, unless supported by 1.638