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“Talking is not the answer!” – Cable at 1.2900 again

Market Analysis

UK100, H4 & Daily

Global stock market stabilisation continues, after the sell off seen on Tuesday following North Korea’s test missile that crossed over Japan and as tropical storm Harvey continues to cause havoc in the U.S. European stock markets recovered some of yesterday’s losses as global risk aversion receded, but are already down from earlier highs and while the GER30 remains up 0.48% on the day it is struggling to hold the 12000 mark, while the UK100 is up 0.32%. Eurozone markets failed to get a lift from strong ESI economic confidence numbers, which together with the uptick in German state and Spanish inflation numbers reviving tapering concerns.

A stronger Pound meanwhile was limiting upside room for the UK100, since cable broke down the  1.2900 level today, once the strong US data released earlier, with ADP Employment Change and Preliminary GDP beating expectations. However  Cable has rebounded back above 1.2900 after diving to a 1.2878 low, with the recovery apparently fuelled by dollar selling sparked by Trump’s latest “talking is not the answer!” tweet on North Korea.

Despite Sterling’s performance, UK100 seems to hold a strong weekly support at 7280-7290.00 area. The UK100 did not manage to break down this support area during yesterday’s big drop, but instead it recovered some of its recent losses .Therefore, yesterday’s Daily Hammer candlestick along with Tweezer Bottom formation noticed today in a shorter time-frame such as 4-hour chart, triggered our LONG position at 7374.5 near term Target 1 at 7406.00, which is a confluence of 23.6 Fibonacci level, 20 Day MA and 50 Day MA. The Target 2 was set below the recent highs at 7435.00. The stop loss sits slightly below the 61.8 Fibonacci level  at 7345.00.

U.S. stock futures are also up, but as tropical storm Harvey continues to cause havoc, and North Korea tensions are unlikely to fully go away for a while, geopolitical risks will continue to hang over markets.

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Andria Pichidi

Market Analyst

HotForex

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