A “flash crash” in the early hours of Asian trading on Friday 7th October for GBPUSD, with Cable plunging to another new multi-decade low and through 1.2000 psychological support.
This activity has left an already technically weak GB Pound exposed to even further losses into October and Q4.
In addition, the Sterling weakness continues to bolster the UK benchmark equity index, the FTSE 100, which has recently hit a new all-time high!
A relatively cautious consolidation Friday, after the extremely aggressive plunge lower on the overnight session Thursday-Friday, to leave a neutral tone for Monday.
However, the “flash crash” to wipe out multi-decade supports, 1.2565 and psychological 1.2000 has reinforced a far more negative intermediate-term outlook.
For Monday: We see a neutral tone between 1.2374 and 1.2483 (with a slight positive bias)
• Break above 1.2483 aims for 1.2615, which we would look to try to cap.
• Break below 1.2374 aims for 1.2311, maybe 1.2226, which we would look to try to hold.
Short/ Intermediate-term Outlook – Downside Risks:
• We see a negative tone with the bearish threat to 1.1943.
• Below here targets 1.1880, 1.1000 and even the 1985 low at 1.0520.
What Changes This? Above 1.3279 signals a neutral tone, only shifting positive above 1.3445.
Monthly GBPUSD Chart
FTSE 100 Future
A firm tone Friday (particularly given weakness to European and US indices) after the corrective setback Wednesday-Thursday rebounded from just ahead of 6956 (off of 6963.5).
Furthermore, the aggressive Tuesday rally through the psychological 7000 level to probe above the previous record high at 7085.5 on the continuation chart (up to 7091.5) keeps the risk for further gains into Monday
• We see an upside bias for 7044.5 and above here to retest the new record high at 7091.5; above here aims through the option/psychological target at 7100, then for Fibonacci extension levels at 7123 and maybe 7158.
• But below 6963.5/56 opens risk to 6917.5, maybe down to 6858.5.
Short/ Intermediate-term Outlook – Upside Risks:
• We see a positive tone with the bullish threat to the new record high at 7091.5.
• Above here targets Fibonacci extension levels at 7158 and 7227
What Changes This? Below the bull gap at 6707.5 signals a neutral tone, only shifting negative below 6600.5.
Weekly FTSE 100 Future Chart