Thus far, the stories of note this morning are that the grains have reversed their recent slide with soybeans rallying to approximately 70 cents above their recent low of almost $15.00 per bushel. Corn futures are staying very close to the $7.50 price level and oat futures are leading the way up in the grains at positive change of almost 2%. We think the “China slowdown” has almost spooked the soybeans market and we see the $15 level (and the $14.75 unfilled gap) as being a solid support area for this market. Sticking with our idea that the markets might not make any large moves before the election, we see corn staying in the $7-$8 range and soybeans holding between $15-$16 until the market knows for certain who will take the U.S. presidential office. The S&P 500 is slightly down as of this writing, but will be reactive to major earnings numbers coming out over the next weeks.
Today we focus our analysis on British pound futures. We see a potential double-top formation at the high area of 1.6250. Sellers came in very strong after the Pound reached that price in April 2012, and took the pound down to 1.54. The pound got all the way back up to 1.63 last month, and has not been able to sustain a rally above that key level. We see the key pivot for this market at 1.60. We believe it is likely the pound will trade back in the middle of its recent range, and head towards 1.5750. The U.S. dollar looks like it may be forming a bullish base and this further supports our idea of a pound sell-off back to the middle of its 2012 range of 1.53-1.63.
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