Sterling
COTD - 25/03 GBPUSD Reflecting on the first quarter of 2019 today as we approach the end of March and taking a look at one of the currency pairs that has dominated news wires and trading desks alike, that is, of course, Cable (GBPUSD).
2019 has seen the tumultuous asset trade from lows of 1.2441 all the way to highs of 1.3381, although it may not be the most aggressive rally or the longest it is of significant importance because it displays the market's attitude towards Brexit and the ongoing negotiations.
The push higher shows that the markets have somewhat priced in the majority of the downside risk as odds of a No-Deal outcome have wained.
On the technical front, we have come up against some resistance at the 1.3350 level (Feb 27 high) as can be seen by the orange horizontal line. The market tried to push above that level but lacked the momentum to close above and hold onto the gains.
Price drifted lower after that and found some support on both the weekly pivot S1 at 1.3032 along with the bullish supporting trendline that has formed since the low at the start of the year.
With Sterling volatility pushing higher as well, we can expect to see some significant moves as we get closer to the now revised deadline of May 22nd.
Personal bias remains long for Cable, however being constantly harrowed by Brexit news means you can expect to see this bounce about significantly, pick your entry carefully and be prepared to see some negative P&L
FX:GBPUSD
GBPUSD: Sterling could rule - get into this!Pound/Sterling may hold some surprises. I have spotted a major curve suggesting probability for the upside. Just don't expect it go go up in a nice smooth way. Brexit is likely to hold some favourable surprises for GBP/ pairs in the longer term. Into April, expect high volatility and trouble.
From Downing Street with LoveHere we go again guys you know what to do....same plays from the loading zone...by now I hope most are locked and loaded in full positions.
Unfortunately we have more Brexit politics in play with PM May sending a letter to the EU council asking for an extension this morning.
From good sources the EU will accept on the assumption May can get her deal through Parliament by mid-April, otherwise, we are left with a choice between a long extension into 2020 or a no-deal. It is fair to say any extension seems more or less priced in at this point so not expecting much after the knee-jerk on the headline.
Expecting the Fed to lower the “dots” signalling one hike in 2019 … a “one and done” approach. June seems unlikely now as the Fed has started to focus on inflation to keep equity markets happy.
My base case is for a hike in December meaning the dollar looks underpriced at current levels and with a lingering ECB easing risk premium EURUSD will start the leg lower after we clear Fed and PMIs.
Chances of a No Deal Brexit Just Increased DramaticallyTraders are now aware of the April 12th deadline and that it will be extended into May if Parliament passes Prime Minister May's deal she made with the EU earlier in the month. However, the last deal she presented to Parliament lost by a staggering 150 votes. That's quite a bit to make up in 20 days. And what traders are probably not pricing in yet is the possibility of a no deal Brexit which the chances of over the past 24 hours just dramatically increased. Chances of accidental no deal Brexit were already elevated before Tusk's ultimatum. Overall, I'm now quite negative on every pound pair. Technicals at the weekly view also suggest GBPUSD is a bit overpriced. Here's more words and charts on the topic if you're interested: anthonylaurence.wordpress.com
GDPUSD Short In ProgressSame as GBPJPY, sterling is very bearish right now. The set up was based on a simple break and retest of the support/liquidity zone (the blue stripe). We can see a huge green shooting star rejected the zone. The spike is more or less due to the FOMC announcement, which also wiped out my other two trades. Then, on the 1H, we see an evening star formation, where I entered my trade.
GDPJPY Short, Simple and EffectiveEven though EURO is rocketing to the sky and hit my SL. POUND is performing well. With the delay Brexit talk pushed to June, GDP is sinking. The setup was simply based on support break and retest. On the 1H chart, you can see 3 times rejection by the support, formed a 3-pin pattern. The target is hit.
An update to EURGBP for BOENow is a good time for a quick chart update ahead of the BOE and Brexit countdown.
PM May playing politics with a "Queens Gambit"….by asking for the short-extension till the end of June she is trying to force MPs hands to vote for her deal... Options from the EU are still either for (short) Mid-May or (long) lasting into 2020. The risk scenario which will send Pound flying down across the FX board is that the EU reject an extension.
We are tracking the same flows towards the top of the range here, and confidence is increasing after the break yesterday. The damage is almost done technically, a rally through current levels will leave us past the point of no return.
The first targets cleared and now 0.8841 remains the second target which is in play as early as this week. Well done everyone riding this one from the lows, it's not the time to start adding longs if you are not already positioned.
Best of luck!
EURGBP Flash Crash Coming Soon..The previous idea "Strengthening the immune system" received a lot of traction and it is time for a quick update here ahead of the vote in HoC today.
Volatility remains very high in the cross, and after the sharp drop overnight the ladder has been cleared for a move back through
resistance at 0.8670.
Watching this very closely and we have the potential for a huge move to the longer-term key area of interest with a Hard Brexit which remains in the region of 0.97 - 1.00.
Good luck.
GBPJPY same plan as beforeHere we are tracking a very similar move to before (see attached: "GBPJPY Shorts on Hourly Chart") on the hourly as bulls become exhausted and unwind their positions for the triple whammy votes this week.
Brexit continues as the driver of Sterling for now, on the UK side we have more votes coming next week so eyeballing a test of the lows beforehand. For those following the updates on Japan you will know we have fiscal year end repatriation flows in play there so we have all the ingredients for a fast leg.
Best of luck those positioned on the sell side.
Expanding Diagonal in GBPNZDHere we can see from the Elliot wave perspective a good example of an expanding leading diagonal. The market is aligned for wave 3 in the sequence to the downside.
From a catalyst perspective, we have a vote on the support of an Art.50 extension today from HoC. This is likely to be approved by the UK today, what is not so clear is whether the EU will allow anything more than a two-month extension (for now the odds are very low).
Meaning we are in the same economic chaotic situation we have been in since the vote; consumers in the UK are going to drown via inflation, GDP will continue to fall, unemployment will tick higher and wages will remain stagnant.
The UK is aligned for a Hard Brexit, leaving the EU without a withdrawal agreement and transition period will push inflation through the roof.
(i) Imported goods will be subject to WTO tariffs
(2) Border disruption will cause shortages and lead to price increases
(3) Weaker currency will increase import prices
This is not going to end well, there is only one direction for the Pound with this scenario. It's time to pay attention once more to the sell-side (i am starting to sound like a broken record!)
Best of luck...
GBPAUD selling opportunityAs mentioned in my previous idea, GBPAUD formed an harmonic pattern and a little pullback. However, the pair suffered a bigger pullback towards the reversal zone where it bounced. We should now see the pair dropping to lower levels.
EurGBP continued downtrenddaily downtrend has been exhausting after a push and is currently nearing a trend resistance level. Here i believe that price will start another push to the downside after the very big bearish engulfind candle last week.
GBP/CAD -- Institutional Money is SHORTGBP/CAD -- heavy manipulation to the upside, wiping out many traders at 1.76400 and 1.77380!
Patience and timing were key to avoid heavy losses.
Our team were in at 1.75837 but with stops carefully placed at key levels which kept our position in the market while other traders faced heavy losses.
Target 1 +160 points.
Target 2 +320 points.
Target 3 +480 points.
Stop loss at 250 points.
More posts to follow on why we trade with multiple targets.
Traditional Morning Cable UpdateAs expected… PM May defeated on her Brexit deal. Although a smaller margin than the first time, with highlights coming from David Davis switching sides and a softer Jacob Rees-Mogg.
Round 2 is in play for the House of Commons tonight. The house are voting on whether it supports leaving the EU without a deal. Markets are overwhelmingly expecting this to be rejected, leaving the possibility of a Brexit extension (round 3) tomorrow the most likely scenario.
I must stress that a one Quarter delay to Brexit should not be viewed as anything other than kicking the can further down the road and postponing the inevitable economic pain that is coming. The extension will offer a third attempt of getting May’s deal through…unbelievable right?… but it is what it is.
The pressure on brexiteers to deliver Brexit is mounting and my base case is for the deal to eventually pass meaning the UK will leave the EU with a Hard Brexit and the Pound will have to devalue to offset the immediate loss of access to the global trade stage.
Here I am remaining short and continuing to load any soft rallies above the 1.32 handle. We are unlocking the floor after this week, best of luck those who are already positioned and those who are loading!
Thanks again for all the support!
The "House of Commons Circus" ContinuesAt this point markets have priced in the support for a Brexit extension of at least one-quarter. The votes today and tomorrow are unlikely to affect EURGBP significantly.
We are still tracking the same break to the upside that we have been for the past few weeks. There is a chance of a small move lower here with the headline on the extension of A50, however, risk investors are going to be underwhelmed with the coming weeks and this will be the catalyst for our break.
Round 2 is in play for the House of Commons tonight. The house are voting on whether it supports leaving the EU without a deal. Markets are overwhelmingly expecting this to be rejected, leaving the possibility of a Brexit extension (round 3) tomorrow the most likely scenario.
The pressure on brexiteers to deliver Brexit is mounting and my base case is for the deal to eventually pass meaning the UK will leave the EU with a Hard Brexit and the Pound will have to devalue to offset the immediate loss of access to the global trade stage.
Best of luck.
GU long.. too much LOVE !!The level to focus on is 1.3526-1.3549, as this area includes two separate ABC targets from January and February.
A break above that resistance range is needed to assume that a more meaningful rally is perhaps developing.
n the downside if this pair breaks below 1.3170 then it will open door for 1.3000 area. if it breaks below 1.3150 then i will look for my entry point to sell and aim for 'D' point.
All the best traders for this week..
its 1 am , going to sleep. good night :]]
Gbpjpy Possible Buy ::>>> Trend-line joining September high to November high, at 149.00 now. But Brexit news can make this pair so volatile and it can affect our analysis so beware and take your calculated risk.
Very clear path for GBPJPY We have a very similar setup to that in GBPNZD (see attached: "Expanding Diagonal in GBPNZD" for more information on the technical side as we will not be covering that here).
As expected the House of Commons rejecting the idea of a no-deal Brexit yesterday (although by default unless there are any changes we are heading for this outcome so it still remains in play). From the fundamental side, nothing has changed. As per today the UK is still set to lose market access with the block, meaning no withdrawal agreement and no transition period.
This will push inflation through the roof, drowning consumers, meaning household spending will remain weak throughout the forecast horizon. Weak wage growth and less credit capacity do not leave the UK in a comfortable position regardless of how the media is trying to sell this story.
In any event, the third and final chapter of the Brexit votes is commencing today. For this one we are tracking whether the HoC can agree on asking for an extension of Art. 50. From very good Westminister sources I can confirm PM May is seeking a two-month extension, however, even if the vote passes the EU are not optimistic with elections around the corner and are unlikely to play ball.
On the Japanese side, the fiscal-year-end repatriation flows to JPY have begun. This is a seasonality flow occurring mid-late March every year as Japanese companies repatriate foreign assets ahead of March earnings.
Best of luck!
House of Commons Round 2Round 2 is in play for the House of Commons tonight. The house are voting on whether it supports leaving the EU without a deal. Markets are overwhelmingly expecting this to be rejected, leaving the possibility of a Brexit extension (round 3) tomorrow the most likely scenario.
Expecting a soft rally on the thought of no-deal being removed. A nice pipe-dream and worth selling with stops above yesterday's high in my opinion.
Lets see how this one plays out. I leave some more pending sells above 1.32.
Dissecting the entire move in Cable (live)We have some time ahead of "House of Commons: Chapter 2" later today so it is a perfect opportunity to start dissecting the moves in cable that have been traded live in Tradingview.
Our first position on the sell-side came in at 1.329 (see attached idea "Selling cable with incoming dollar strength") as we were expecting the highs to be set as markets finished pricing in the expectation of at least a one-quarter 'delay' of Art 50. This '((iii))' leg finished after an inline/soft NFP with 20k jobs killing the flows.
After another soft rally before the "meaningful" vote yesterday we re-engaged selling at the 1.326 level (see attached "An update to cable ahead of the vote"). Those who are paying attention to the 1.311 target managed to book some profits, I know a few from the Forex chat did, which gave us the '((v))' part in our sequence.
Finally we are arriving for the 2nd leg in the 5 wave sequence, we are outguessing that the highs of "iv" will not be taken and looking to swing the enter positions initially towards the 1.28/1.29 area with targets beyond that at 1.24 and 1.21.
Lets see how it goes, feel free to open up the comments below if there are any queries.
