GBPUSD: Vulnerable Despite Recovery
GBPUSD: Having reversed higher off the 1.5778 level on Tuesday and following through in early trading today, risk of further bull pressure cannot be ruled out.
Though with one caveat, the pair continues to retain its short term weakness and there is a possibility of returning below the 1.5778 level. In such a case, the 1.5749 level, its Jan 25’2011 low will be targeted followed by the 1.5700 level, its psycho level and then the 1.5600 level.
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Alternatively, on continued recovery higher, a return above the 0.6140 level may occur triggering further strength towards the 1.6262 level, its Jun 22’2011 high.
However, the ultimate test will be a return above the 1.6546 level, its May 31’2011 high. This if seen will turn upside risk towards the 1.6743 level, its 2011 high and subsequently the 1.6877 level, its Nov’2009 high.
All in all, GBP still faces bear threats despite its recovery attempts.
CRUDE OIL: Recovering But Still Vulnerable
CRUDE OIL: Although the commodity has halted its two-day weakness initiated from the 97.18 level following a sharp rally on Tuesday, the risk of resuming its short term weakness remains on the cards.
For Crude Oil to prevent this from occurring, it will have to initially break and hold above the 99.41 level, its July 07’2011 high followed by a climb above the 104.48 level, its May 10’2011 high.
In case this occurs, further strength will build up towards the 110.00 level, its psycho level with a violation of that level allowing for further weakness towards 114.82 level, its 2011 high.
Its daily RSI is bullish and pointing higher supporting this view.
Alternatively, a return below the 89.60 level, its Jun 27’2011 low on failed corrective attempts will clear the way for a run at the 83.84 level, its Feb 15’2011 low and then the 80.28 level, its Nov 23’2010 low.
All in all, Crude Oil has halted its recent declines and continues to maintain its short term downtrend theme.