Short Sterling – March 2010

Nicole Elliott from Mizuho Corporate Bank at 10/21/09

Comment: Over the last week open interest in this contract has picked up smartly suggesting many are hedging their bets. ‘Triangle’ consolidation over the last six weeks should lead to a break higher, hopefully sooner rather than later because September’s candles will give the Lagging Span a small lift. The contract is no longer overbought and might get a push from the rising 26-day moving average. While above 99.000 we shall allow for a series of very cautious rallies towards 99.500, noting that three month Libor today is 58 ¼ basis points.

Strategy: Possibly attempt small longs at 99.140; stop below 99.100 to re-buy closer to 99.000. Target 99.220 and then 99.350/99.450.