Stocks and Dollars

On Thursday Pound/Dollar continued decreasing significantly with 155 pips. The Cable depreciated from 1.5934 to 1.5779 yesterday, in line with the negative money flow sentiment at under -23%, closing the day at 1.5793. Today the British Pound weakened further, descending down to 1.5731, than commenced correcting.

‘The market’s very concerned about contagion and Spain probably being the biggest focus of attention after Greece. If the euro breaks $1.26, there’s probably not a lot of stops going to the lows that we saw in 2010′ – Rochford Capital (based on Bloomberg)

On Thursday Dollar/Yen decreased significantly with almost 130 pips. The currency couple depreciated from 80.40 to 79.12 yesterday, matching the negative money flow sentiment at around -18%, closing the day at 79.25. This morning the Dollar is trading quietly against the Yen, with movements at the lower end of yesterday’s range for now.

Despite intra-day resumption of decline to 1.2642, lack of follow through selling and current rebound suggest minor low is possibly formed and retracement to the Ichimoku cloud bottom (now at 1.2726) cannot be ruled out, however, upside should be limited to previous resistance at 1.2759) and price should falter well

Today’s low at 1.2641 is practically a test of 1.2624 support area on the senior frames and there is a chance for a reversal, which should provoke a larger consolidation rebound towards 1.2815 and 1.2910. The intraday outlook is slightly positive above 1.2670 support and a break above 1.2735 will clear the way for 1.2815.

Although aussie has fallen again to as low as 0.9794, lack of follow through selling and current rebound suggest consolidation would be seen and recovery to 0.9900, then 0.9950-60 cannot be ruled out, however, renewed selling interests should emerge around 1.0015-20 and bring another decline later. A break

Despite intra-day selloff to 100.22, loss of near term downward momentum should prevent sharp fall below psychological support at 100.00 and reckon 99.00 would limit downside, bring a much-needed correction later. Above 101.10-15 would bring minor correction to 101.55-60 but renewed selling interest should emerge around yesterday’s high of 102.38

Although the single currency has remained under pressure after recent selloff and marginal weakness from here cannot be ruled out, near term oversold condition should limit downside to psychological support at 100.00 and risk remains for a corrective rebound to take place, above the Tenkan-Sen (now at 102.50) would suggest