GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

GBP Summary

As we have updated in recent months we have been expecting significant gains in GBP pairs and crosses. All our GBP trades were long positions since we noted the potential for a bullish reversal. We did however anticipate Theresa May’s brexit speech that has been scheduled for 22 September, 2017 to be the first trigger, which was not the case.

As the UK CPI exceeded the expectations the Bank of England (BOE) signaled a rate hike may be seen in the upcoming months should it will be supported by economic data.

Re-entering GBP prior to Theresa May’s speech on Friday is challenging. Based on the weekly charts we will require a retracement to the recent gains, however, even if a retracement does materialize a weekly close may cement the entry, which will be after the anticipated speech.

GBPCHF Weekly Chart

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

GBPCHF Weekly Chart 18/09/17

GBPJPY Weekly Chart

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

GBPJPY Weekly Chart 18/09/17

There is no guarantee GBPJPY will re-test the breached resistance levels in the above charts, however we must have some retracement in order to consider a long position. Entering at market price would mean absorbing hundreds of pips of potential drawdown that we would rather avoid.

In an event no retracement takes place we will have to re-assess GBPJPY and GBPCHF. Theresa May’s brexit speech on Friday (22 September, 2017) is quite significant but we will not enter GBP at any costs. From our understanding the UK may agree to pay the divorce bill that will be spread across a number of years where a payment is made per annum.

NZDUSD Technical Signal

We have mentioned in our email updates that we are monitoring EURNZD. The signal is fairly strong, the challenge is the location of the protective stop. Initiating the signal at current levels requires a protective stop that nears +400 pips. We are also noting a potential long entry in NZDUSD but we anticipate the Fed monetary policy on Wednesday to be the trigger.

EURNZD may fall in either scenario, hawkish or dovish statement from the Fed. NZDUSD may only benefit from a weak USD. As we mentioned at the end of August there is a monthly entry in NZDUSD that we decided to avoid due to the conflict with the daily chart. The conflict is still present at the time of this writing but the new potential entry in EURNZD does concrete NZDUSD.

NZDUSD 4hr Chart

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

NZDUSD 4hr Chart 18/091/17

If timed correctly we should be in some profit within the next 24 hours, possibly due to economic data from the US and the GDT auction. We will not be providing much room for NZDUSD to retrace lower. If we are not in a profit prior to the Fed monetary policy we may have to reduce our exposure to provide more room for the signal.

NZDUSD Trade Alert

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

NZDUSD 4hr Chart II 18/09/17

We should write that we are displeased with the recent gains in NZDUSD as the odds for being in an immediate drawdown have increased but this is a potential drawdown we will have to absorb if materializes.

The recent gains have also increased size of the protective stop but it is still tolerable.

NZDUSD long at market price (ask 0.7267)
Take profit: 0.7418
Protective stop: 0.7212
Risk Ratio (RR): 1 : 2.5 (approx.)
Estimated duration: 3 days (approx.)

Price range: relevant as long as NZDUSD remains below 0.7280

19/09/17 UPDATE: We are closing 30% of NZDUSD long trade at market price (0.7307) and shift the protective stop to 0.7268 as this is a 4hr entry. If we are too close to the market prior to the daily close we may temporarily adjust the stop due to the spread widening.

20/09/17 UPDATE I: A new elections poll triggered the recent gains in NZD pairs and crosses.

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

NZDUSD 4hr Chart 20/09/17

As this is a 4hr entry we are shifting the protective stop to 0.7285 and close 20% of the long trade at market price (0.7349).

20/09/17 UPDATE II: NZDUSD breached 0.7335, which was a signal for further gains. We were expecting 0.7390 to be breached due to the Fed monetary policy, however, 0.7390 was recently tested by the market. We cannot determine if 0.7390 will be breached and we also noted EURNZD reached a 4hr support level.

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

NZDUSD 4hr Chart II 20/09/17

This was a tough decision but we are closing NZDUSD long trade at market price (0.7383).

GBPJPY Trade Alert

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

GBPJPY 4hr Chart 21/09/17

GBPJPY long at market price (ask 151.80)
Take profit: 154.30 (reduced to 153.94)
Protective stop: 150.69
Risk Ratio (RR): 1 : 2.3 (approx.)
Estimated duration: 24 hours (approx.)

Price range: relevant as long as GBPJPY remains below 152.20

Note: The potential drawdown is re-test of 151.15. We cannot determine if the re-test will take place but it must be anticipated. We are taking a risk by initiating a long trade at a high price.

21/09/17 UPDATE: The recent gains in GBPJPY may suggest further gains may take place in Asia. We must now also consider the possibility GBPJPY gains may be unrelated to Theresa May’s speech tomorrow.

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GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

GBPJPY 4hr Chart II 21/09/17

As this is a 4hr entry we are closing 30% of the long trade at market price (152.55).

21/09/17 UPDATE II: The fact GBPJPY gains began in today’s session places is fairly challenging to manage as it is a 4hr chart and not a daily or weekly chart. We are lowering the take profit order to 153.94

There is a fair possibility further gains may be seen in Asia and may raise concerns on GBP trend during the brexit speech. Shifting the protective stop is the more challenging part. If we tighten the stop it may be triggered by the market even if GBPJPY uptrend may resume. We are still seeing a possibility of the market re-testing 151.15.

This is probably the toughest decision we have made in this month but we decided not to shift the protective stop and wait for the European session where the stop may be adjusted then.

It is a difficult decision as by the book we are meant to tighten the stop but we are seeing a risk of stops being targeted around 151.15. We will issue a trade update on GBPJPY during the European session or if significant gains take place within the next 40 minutes.

22/09/17 UPDATE: As we liquidated 30% of the trade at a higher price we decided to shift the protective stop to 150.59.

Threats from North Korea to detonate a hydrogen bomb in the ocean forced safe haven flows into the yen although we must say GBPJPY would have still retraced lower. We do not know the exact time of the speech but it is expected to take place after 13:00 GMT. From a technical angle it is better to see a retracement prior to the speech than corrective gains.

The opening remarks of the speech are extremely important. As we near 13:00 GMT the volatility in GBPJPY will intensify. GBPJPY is trading at 151.78 at the time of this writing.

22/09/17 UPDATE II: We are downsizing our exposure in GBPJPY. GBPJPY is trading at 151.50 at the time of this writing, we are closing 30% of the long trade at market price as we cannot roll the trade over the weekend without significantly widening the stop.

22/09/17 UPDATE III: We are closing GBPJPY long trade at market price (151.65) as we cannot roll the trade over the weekend. The entry is intact but it requires widening the stop, which we refuse to do regardless of the outcome.


AS ALL THE SIGNALS IN THIS PAGE ARE CLOSED THE STRATEGIES ARE NOW ACCESSIBLE TO ALL TRADERS



GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage

GBPUSD Potential Signal Ahead of Brexit Speech and NZDUSD Coverage