deep and shallow volume confluenceVolume confluence with these low levels. Price has strong buyers underneath so get ready for USD strength which can confluence into some indices weakness tomorrow
M6B1! trade ideas
Tug of War Among Central BanksThere is a tug of war situation among the central banks to hike interest rates. What is the bad and the good that will come out from this?
i. Last week of October, European Central Bank officials announced another massive 75 basis point hike, increasing interest rates at the fastest pace in the history of the euro currency.
ii. This week, the Federal Reserve is expected to increase rates by 75 basis points for the fourth time in a row.
iii. The Bank of England could join the club on Thursday.
Content:
. The Interest Rate race has just started, why?
. The impact on different currencies
. It may not be all bad news, why?
With higher interest rates, it attracts investors to buy its currency, in this case the USD.
Currency is always a pair, when USD strengthens, the other side weakens.
When a currency gets weaker, it is very bad news for inflation because they will have to pay more on their imports.
Therefore in order to counter inflation, one of the best measures is to hike rate
Expect more volatility in the currencies market, meaning currencies will take its turn to move.
And if you are a trader, you should welcome volatility. Because with volatility, there are opportunities.
GBP Futures
0.0001 = $6.25
0.001 = $62.50
0.01 = $625
0.1 = $6,250
1.1000 to 1.2000 = $6,250
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
$GBP slipper slope - shortOne-year risk reversals in cable, a barometer of market positioning and sentiment, rallied on Monday in favor of calls by the most since June 2016, implying bearish sentiment haunting the currency retreated almost as fast as the government’s decision to scrap plans for vast unfunded fiscal stimulus. The gauge had reached a record bearish level last week on concern the policy would balloon the government deficit and fan inflation.
In an added sign of the improving outlook, hedge funds -- which flock to options markets to place large bets -- have been closing options structures that pay out should the pound weaken since Friday. That’s according to Europe-based traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly.
To be sure, bearish bets still dominate the options space and the magnitude of the move was mainly down to extreme positioning. Still, it shows investors now see lower chances for a deep drop in the UK currency following the policy U-Turn. The repositioning came as the pound rallied on Monday, outperforming Group-of-10 peers to rise 1.7% to $1.1358.
Sterling swung between gains and losses in early trading on Tuesday following a report the Bank of England is likely to delay its planned sale of government bonds. It was trading 0.2% weaker at $1.1339 as of 9:29 a.m. London.
I disagree w/this analysis. I believe the headwinds remain unchanged and they are strong. The market isn't the public, it votes w/its money and the smart money is selling. Further, the BOE isn't in the business of buying gilts (bonds) but it did and is holding them. Why? because when Truss put them to mkt - they got no bid. The BOE smartly doesn't want to get the same pie on its face so, its booking them. Nothing has changed. Down range it remains the same.
London Bridge is Falling Down!CME_MINI:M6B1!
U.K. financial markets went into a freefall last week as Prime Minister Liz Truss announced aggressive income tax cuts amid deep fiscal trouble.
British pound is trading at $1.11 to USD, half of its value in 2007. However, it’s unfair to blame everything on a new PM and a new King. Both got their jobs just a month ago.
Sterling’s downfall started at the Bretton Woods in 1944, where US dollar replaced it as the default currency in international settlement. More recently, Brexit made UK weaker and less integrated into the global economy.
Let’s take a quick look at what happened in the last decade:
David Cameron (2010-2016)
• Mr. Cameron was reelected Prime Minister for a second 5-year term in May 2015
• To fulfill his campaign promise, he organized a referendum on June 23rd, 2016
• When asked if the UK should stay in the European Union, 51.9% of the voters said No
• On July 13th, 2016, Mr. Cameron resigned
Theresa May (2016-2019)
• Theresa May became the new Prime Minister after Mr. Cameron resigned
• In the following three years, she failed to negotiate exit terms with the EU
• On July 24, 2019, Theresa May resigned
Boris Johnson (2019-2022)
• Former London Mayor Boris Johnson replaced Theresa May as Prime Minister
• He engineered a hard Brexit in January 2020 without finalizing exit terms
• Johnson led UK government through global pandemic and Russia-Ukraine conflict
• On July 7, 2022, Boris Johnson announced his resignation
Liz Truss (September 6th, 2022 - Present)
• On September 23rd, Liz Truss announced the so-called “UK mini-budget”
• Key points: cut income tax from 20% to 19% and abolished a 45% higher tax rate
• New budget was received poorly by investors, causing market panic last week
When each of the Prime Ministers left office, they saw Sterling weaker than the day they assumed office: Cameron, from $1.7 to $1.3; May, from $1.3 to $1.2; Johnson, from $1.2 to $1.15; Truss, in less than a month, from $1.15 to $1.09 before rebounding to $1.11.
Where Will Sterling Go from Here?
Recent depreciation of Sterling can be explained by the Interest Rate Parity (IRP) theory.
IRP states that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. It basically says that a country with higher interest rates would lead to a stronger currency.
• In 2022, the Fed raised interest rates five times for 300 basis points (bps), to 3.00%-3.25%
• In comparison, the Bank of England raised rates three times for 125 bps, to 2.25%
• European Central Bank raised rate only once for 75 bps, to 0.75%
• The Fed outruns the Bank of England and the ECB in both interest rate level and the frequency of rate hikes
• As prescribed by the IRP, aggressive Fed tightening results in a strong dollar, and weak Sterling and Euro
In the next year, I expect the pending global recession could result in a soft landing in the US, but hard landing in both the UK and the European continent.
In the long run, exchange rates reflect the relative strengths of two countries. The divorce of the UK from the EU makes them both weaker players on the world stage.
In 2021, the European Union had an aggregate GDP of $17.9 trillion, making the EU Block the 2nd largest economy in the world behind the US. However, after exclusion of UK’s $3.11 trillion GDP, the 27-nation EU would rank 3rd behind China.
UK ranks 5th, after the United States, China, Japan, and Germany. This is a far cry from the mighty British Empire which accounted for a quarter of the world economy in 1870. Today’s British Commonwealth is a loose network of countries with shared culture and history. None uses Sterling as legal currency except for the UK.
How to Trade a Bearish View in British Pound?
The next Fed rate-setting meeting is scheduled on November 1-2. October may be a calm month in terms of US monetary policy actions.
However, in a crisis mode, it’s quite possible for both the Truss administration and Bank of England to utter emergency measures to strength the British financial markets, with Pound Sterling included.
I would watch the British government actions closely in the next few weeks. We could wait for a rebound of Sterling before putting on the Short Futures trade.
CME Micro GBP/USD futures ( CME_MINI:M6B1! ) has a notional value of £6,250. Initial margin is $255 per contract. December contract (M6BZ2) is currently quoted at $1.1172.
Barring a new "Lehman moment", the Fed would stay on its course to raise rates and fight inflation. I expect dollar to resume its rise against the Sterling in November and December.
On July 13th, my trade idea, The Demise of Euro Is Not Greatly Exaggerated, called for shorting the Euro. The Euro has since fallen a whopping 2% to $0.98 from on par with the dollar. My opinion on a bearish Euro CME:6E1! still holds today.
Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. TradingView users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Is the GBP on the edge of a cliff?As the British Pound approaches a major support level of 1.4000, we think it is akin to peering over the edge of a cliff.
With one of the worst headline inflation rates in the developed markets, crippling energy bills, and a newly elected government, the Bank of England (BOE) is in a place few would want to be in. As the next policy meeting date nears, the central bank is likely to raise rates. But by how much?
Too little, and inflation will remain a key issue weighing on the currency’s attractiveness compared to the USD. Too much, and consumers will be crushed with the already astronomical energy bills and rising loan re-payment, likely pushing the UK further into stagflation, something that central banks try to avoid.
Either way, pound traders are likely to be disappointed. And we have not even begun to mention the effects the energy bill cap might have on longer-run inflation.
The technical setup proves more interesting as the current price lies right on the 1.4000 level, a major support level, only ever breached once in 1984 and retested once in 2020. We think a clear break of this will likely lead the pound to fall harder as traders ride the downward momentum.
On a shorter timeframe, the pair is arguably trading in a descending channel. As current prices teeter on the lower channel band, a breakout at the downside could spell trouble, sending the pair lower.
There seems to be little in the way to slow the move lower for the GBPUSD pair as both macro headwinds and technical ones beat down the Pound lower against the USD. With the US Federal Reserve meeting on the 21st and Bank of England meeting on the 22nd of September, we expect higher volatility over the next few days, a snap lower could drive momentum traders to further extend the downside move.
Entry at 1.1450, stop at 1.17400. Target at 1.08000 and 1.06150.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
forecasting BRITISH POUND FUTURS 6B , IN 30 MIN Hello to all investors, according to my previous studies and according to my experience as a trader, I see a good investment opportunity with a high probability of success, the details are reflected in the graph
MICRO GBP/USD Futures (M6B1!), H4 Potential for Bullish RiseType : Bullish rise
Resistance :1.1774
Pivot:1.1650
Support : 1.1497
Preferred Case: On the H4, with the price breaking the descending trendline and ichimoku cloud, we have a bullish bias that the price may rise from the pivot at 1.1650, where the current price and overlap resistance are to the 1st resistance at 1.1774 where the overlap resistance and 38.2% fibonacci retracement are.
Alternative scenario: Alternatively, price could drop to the support at 1.1497, where the 61.8% fibonacci retracement is.
Fundamentals: Although many data of GBP out today are lower than expectation, the drop of DXY has stronger impact on the price. Therefore, we hold a weak bullish bias.
Bullish Sterling going into next weekMonday we create the low of the week with the high impact news driver and see the high of the week on Thursday of Friday
Big bullish weekly candle I expect.
MICRO GBP/USD Futures (M6B1!), H4 Potential for Bullish RiseType : Bullish rise
Resistance :1.1609
Pivot:1.1504
Support : 1.1445
Preferred Case: On the H4, with the price pullback from the support, breaking the descending trendline, combined with the fundamental news, we have a short term bullish bias that the price may rise from the pivot at 1.1504, where the current price is to the 1st resistance at 1.1609 where the overlap resistance and 38.2% Fibonacci retracement are.
Alternative scenario: Alternatively, price could drop to the support at 1.1445, where the swing low is.
Fundamentals: Halifax HPI m/m is out today, which is better than the expectation and previous data.
MICRO GBP/USD Futures (M6B1!), H4 Potential for Bullish RiseType : Bullish rise
Resistance :1.1609
Pivot:1.1504
Support : 1.1445
Preferred Case: On the H4, with the price pullback from the support, breaking the descending trendline, combined with the fundamental news, we have a short term bullish bias that the price may rise from the pivot at 1.1504, where the current price is to the 1st resistance at 1.1609 where the overlap resistance and 38.2% Fibonacci retracement are.
Alternative scenario: Alternatively, price could drop to the support at 1.1445, where the swing low is.
Fundamentals: Halifax HPI m/m is out today, which is better than the expectation and previous data.
BRITISH POUND Futures (6B1!), H4 Potential for Bearish DropType : Bearish Drop
Resistance : 1.2016
Pivot: 1.1894
Support : 1.1781
Preferred Case: On the H4, with the price moving below the ichimoku cloud and moving within the descending trend line , we have a bearish bias that the price may drop from the pivot at 1.1894, which is in line with the 78.6% fibonacci retracement to the 1st support at 1.1781, where the swing low is.
Alternative scenario: Alternatively, price may rise to the 1st resistance at 1.2016, which is in line with the 38.2% fibonacci retracement .
Fundamentals: the retail sales data (0.3%) was out today, which is higher than the expected and previous (-0.2%), which is a positive signal of economy, therefore we could expect the drop momentum decrease recently.
BRITISH POUND Futures (6B1!), H4 Potential for Bearish DropType : Bearish Drop
Resistance : 1.2016
Pivot: 1.1894
Support : 1.1781
Preferred Case: On the H4, with the price moving below the ichimoku cloud and moving within the descending trend line, we have a bearish bias that the price may drop from the pivot at 1.1894, which is in line with the 78.6% fibonacci retracement to the 1st support at 1.1781, where the swing low is.
Alternative scenario: Alternatively, price may rise to the 1st resistance at 1.2016, which is in line with the 38.2% fibonacci retracement.
Fundamentals: the retail sales data (0.3%) was out today, which is higher than the expected and previous (-0.2%), which is a positive signal of economy, therefore we could expect the drop momentum decrease recently.
New GBP Futures Bullish AnalysisBrk abv support.
not bearish unless price breaks below 1.215
Tg 1.238
British Pound futures. Potential idea.CME:6B1!
👉 1. Price goes ABOVE the selected range on the picture. Long positions to activate. 🟢
👉 2. Price goes BELOW the selected range. below. Short positions to activate. 🔴
⚠️ Important Notes:
1. Follow your risk management rules.
2. Timeframes: up to 1D
Micro GBPUSD Futures (M6B1!), H4 Potential for Bullish RiseType : Bullish Rise
Resistance : 1.2287
Pivot: 1.2157
Support : 1.2077
Preferred Case: On the H4, with price moving above the ichimoku indicator and within the ascending channel , we have a bullish bias that price will rise from the pivot at 1.2157 where the pullback support and 50% fibonacci retracement are to the 1st resistance at 1.2287 in line with swing high resistance, 78.6% fibonacci retracement and 61.8% fibonacci projection .
Alternative scenario: Alternatively, price could break pivot structure and drop to 1st support at 1.2077 where the pullback support, 78.6% fibonacci retracement and 78.6% fibonacci projection are.
Fundamentals: The UK's Prelim GDP q/q and GDP m/m are anticipated to show a decline in economic activity. This gives us a bearish view on GBPUSD . We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.
Micro GBPUSD Futures (M6B1!), H4 Potential for Bullish RiseType : Bullish Rise
Resistance : 1.2287
Pivot: 1.2157
Support : 1.2077
Preferred Case: On the H4, with price moving above the ichimoku indicator and within the ascending channel , we have a bullish bias that price will rise from the pivot at 1.2157 where the pullback support and 50% fibonacci retracement are to the 1st resistance at 1.2287 in line with swing high resistance, 78.6% fibonacci retracement and 61.8% fibonacci projection .
Alternative scenario: Alternatively, price could break pivot structure and drop to 1st support at 1.2077 where the pullback support, 78.6% fibonacci retracement and 78.6% fibonacci projection are.
Fundamentals: The UK's Prelim GDP q/q and GDP m/m are anticipated to show a decline in economic activity. This gives us a bearish view on GBPUSD. We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.
British Pound Futures (6B1!), H4 Potential for Bullish MomentumType : Bullish Rise
Resistance : 1.2286
Pivot: 1.2161
Support : 1.2047
Preferred Case: On the H4, with icpre moving along the ascending trendline and above ichimoku cloud , we have a bullish bias the price may rise from the pivot at 1.2161, where the 23.6% fibonacci retracement is to 1st resistance at 1.2286, which is in line with the 78.6% fibonacci retracement .
Alternative scenario: Alternatively, price could drop to the 1st support at 1.2047, which is in line with 50% fibonacci retracement .
Fundamentals: The interest rate in the UK is at 1.25% with the recent rate increases from the BoE failing to have an impact on slowing inflation growth, as the UK CPI stands at 9.1%, a 4-decade high. The BoE is under pressure to take on a more aggressive approach in setting future policy rates. Gov Bailey indicated that the BoE could increase interest rates by 50bps as it attempts to address the issue of persistent inflation .
British Pound Futures (6B1!), H4 Potential for Bullish MomentumType : Bullish Rise
Resistance : 1.2286
Pivot: 1.2161
Support : 1.2047
Preferred Case: On the H4, with icpre moving along the ascending trendline and above ichimoku cloud, we have a bullish bias the price may rise from the pivot at 1.2161, where the 23.6% fibonacci retracement is to 1st resistance at 1.2286, which is in line with the 78.6% fibonacci retracement.
Alternative scenario: Alternatively, price could drop to the 1st support at 1.2047, which is in line with 50% fibonacci retracement.
Fundamentals: The interest rate in the UK is at 1.25% with the recent rate increases from the BoE failing to have an impact on slowing inflation growth, as the UK CPI stands at 9.1%, a 4-decade high. The BoE is under pressure to take on a more aggressive approach in setting future policy rates. Gov Bailey indicated that the BoE could increase interest rates by 50bps as it attempts to address the issue of persistent inflation.
Micro GBP/USD Futures (M6B1!), H4 Potential for Bullish RiseType : Bullish Rise
Resistance : 1.2181
Pivot: 1.2061
Support : 1.1955
Preferred Case: On the H4, with prices moving within an ascending channel and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 1.2061 where the pullback support is to the 1st resistance at 1.2181 where the overlap resistance, 61.8% fibonacci retracement and 127.2% fibonacci extension are.
Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 1.1955 where the pullback support, 50% fibonacci retracement and 61.8% fibonacci projection are.
Fundamentals: Due to the current political uncertainty in the UK, rampant inflation and relatively modest interest rate increases, we have a bearish bias on the GBPUSD . We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.
