Results will be with us in just over 2 weeks time, I will say again UK retail sales must be positive, we have had the perfect storm in terms of weather, great summer and then winter has started early, the high street was buoyant last week as the higher price point styles kicked in. As stated before v interested in US results and profit outlook. Particularly what the impact is of the strong pound, FC source the majority of their goods from far east but obviously they have US stores. I would have thought the impact of sourcing gain (circa -10% decrease in cost price of goods) would outweigh the drag of the US stores.
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Back to the Technicals. The small sell off last week has now allowed the rally off the August lows at 48p to the highs around 62p, to be labelled as Minute 1 of Minor 1 of intermediate 5.(This is the preferred count at present). The decline currently in play to date has retraced 38.2% of the previous advance, with the low at around 57.2p and can be labelled as minute 2 of minor 1. The decline so far looks to be forming an a simple three part move which is corrective to the previous wave,which was to the upside. There is no evidence wave 2 is complete with only a move above the high of minute 1 at around 62p allowing confirmation. Should this happen, then this will signal the start of wave 3 and some very positive price action. As there tends to be a Fibonacci relationship between the first wave and the third wave in any impulsive sequence, it will then possible to possible to calculate a series of targets for wave 3. That is the next step on any confirmation that the third wave has begun. Best regards
25 Aug '14
Back to the technicals. The upmove developed last week and there is now enough evidence that the symmetrical down channel in place since mid May has been broken to the upside. Furthermore, there has been an overlap of the first five wave decline from the May highs ruling out the current upmove as a wave 4 corrective rally, as wave 4 cannot overlap wave 1 in a trending sequence. Therefore it is highly probable that the decline from the highs in May completed an intermediate wave 4 in the form of an ABC, 5,3,5 correction of the previous implusive wave to the upside. If that is the case then this new uptrend can be labelled as such, and could take the form of two bullish counts. The first and most likely is that this is intermediate wave 5 of this uptrend from the lows in 2012 at around the 20p level. Intermediate 5 should take the form of three implusive minor waves to the upside 1,3,5 with two corrective waves 2,4 in between, which should alternate in terms of time and price. If this is the case then this 5 impulsive wave has a high probability of exceeding the intermediate wave 3 highs posted in May at around the 93p level. Currently the rally is somewhere in minor 1 of intermediate 5 and is right on horizontal resistance at the 61.5p level. Once this wave is complete, and there is no evidence of that yet, a wave 2 decline should retrace a proportion of this advance before the 3 wave begins. Please remember that the third wave in any sequence tends to be the strongest and most powerful. The second and most bullish count is that this is a rally of cycle degree, not intermediate, with each rally and then decline since the 2012 lows forming a 1/2 1/2 sequence, with a cycle degree wave 3 now in its infancy. This would be very bullish and the rally from such a move would likely exceed the previous high in May by some margin. But again the key here is not to look to far ahead and observe the price action as it unfolds and label accordingly. Best regards
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