In the Nov 6th email on cable, affirmed the bearish view of new lows below the Oct 1.5275 low (still short from the Oct 29th resell at 1.6325). The market has since accelerated to the downside, taking out long term support at the 13 year bullish trendline (currently at 1.51/1.53, see longer term below). With no signs of even a short term bottom, expected new $ highs in most other currencies (except $/yen), and the view of no important reversal in financial markets until the mid Dec timeframe, further declines toward 1.4400/1.4500 (both the base of the bearish channel since Sept and a 62% retracement from the 1985 low at 1.0345) and potentially below is favored ahead.
Shorter term however, other currencies have not confirmed cable’s tumble to new lows ($ highs) and raises the risk for a week or 2 of consolidating in the broader $ before resuming the downtrend (could lead to period of downward chopping in cable). For now want to stay short (resold in the Oct 29th email at 1.6325), but using a fairly wide stop on a close above the bearish trendline from late Oct (currently at 1.5750). Resistance before there is seen at the broken Oct 1.5275/85 low, while nearby support is seen at the earlier 1.4900 low.
Longer term no change in the long held, longer term bearish bias as the market continues lower within wave III in the fall from the March 2008 high at 2.0395 (see numbering on weekly chart/2nd chart below). Though this suggests at least 3-4 months of correcting higher and a 20-25 big figure bounce after, there are still no signs that wave III (began at the July high at 2.0150) is “complete”. As mentioned above however, there is potential for a significant reversal around the mid Dec timeframe, so could see weakness into that time before forming an important, multi-month bottom (see “ideal” scenario in red on weekly/2nd chart below). However, don’t want to get too far ahead of ourselves so for now, would maintain the long held, longer term bearish bias.
