British pound futures traded on the Chicago Mercantile Exchange (CME) have rallied five straight days, with the last three showing the market rocket up 1.5% before closing Wednesday at $2.0785. The market is already trading at an all-time high, but the history of this bullishness coupled with trading above the upper Bollinger band while hedgers are net short has some strong bullish results as well.
Q: How has the British Pound responded to three consecutive rallies with the most recent being 'big', coupled with three consecutive closes above the upper Bollinger bands all while hedgers are net short?
A: According to the 11 previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge® indicates that CME pound contract has shown a strong bullish edge that peaks nine trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Oct. 31, 2007) is Tuesday, Nov. 13 2007.
The pound rallies in 82% of the cases (9 of 11) by an average of 1.4% relative to the close on the event date. The average of the two declines is 0.3%. The overall return of the 11 cases is 1.1%, which, based on the close of the CME pound contract on the event date, $2.0785, provides a target price of $2.1014.
If you would like to see more details of this historical edge, go to www.markethistory.com HYPERLINK "http://www.markethistory.com/staff/detail.html?s=mickey" Mickey Schoenhals is an analyst with Markethistory.com.
