British Pound Futures (CME.BP) opened up 'big' on Tuesday, where the opening price represented a percentage gain of more than one standard deviation stronger than the average. The opening price of 2.0008 was also the high of the day. After the good start, BP traded downward seeing a 'trend day' down pattern, where the open was in the upper 20% of the day's intra-day range while the close was in the lower 20%. Nevertheless, BP managed to close up at 1.9926 after closing Monday's session at 1.9852, a one-day gain of 0.4%. BP also traded at a 13-week high for a second day in a row on Tuesday.
Q: How has CME.BP performed in the past when, during the second half of the year while trading above its 200-day moving average, after opening up 'big' it sees a 'trend day' down pattern, but still records a rally?
A: According to the nine previous occurrences of this event, EventEdge indicates that CME.BP has shown a very strong bullish edge that peaks 21 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Tuesday, July 15, 2008) is Wednesday, August 13, 2008.
CME.BP rallies in 100% of the cases (9 of 9) by an average of 2.6% relative to the close on the event date. Which, based on the close of CME.BP on the event date (1.9926), provides a target price of 2.0444.
The second graph illustrates how BP performs when, while trading at a 13-week high, after opening up 'big' it 'trends down' but still records a rally. In this case, there are only six previous occurrences, but the edge is much stronger.
CME.BP also peaks 21 trading days later after this event, rallying 100% of the time by an average of 3.1%, providing a slightly higher target price of 2.0544.
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Ronish Patel is an analyst with MarketHistory.com.
