The Weekly Update: Article 50 Is Looming

Several market-moving events took place in the past that revived the FX markets. The Fed hiked rates as expected, however, the market was left disappointed with the FOMC statement. The US Dollar (USD) was immediately sold against a basket of currencies, which affirmed our decision to opt for GBPUSD at the beginning of last week as we were looking for weak USD as a result of the Fed monetary policy and a strong GBP. On Thursday one of the BOE members voted for a rate hike of 25bps (0.25%) that sent GBP higher against a basket of currencies. As we updated all our subscribers, there are suggestions the BOE may hike rates in its next monetary policy. Remarks from one of the ECB members introduced the market the possibility of a deposit rate hike during the current QE program, which sent the Euro higher against a basket of currencies. Despite being asked by the EU to trigger Article 50 in June, Theresa May affirmed she will invoke Article 50 within 14 days, which suggests it may be at the very end of March, 2017. As A50 is already priced-in, we suspect the content of the article may trigger some volatility as the market would like to note whether any fee is paid to the EU as a result of the brexit, a fee that was rejected by the British PM.

The French elections’ polls are likely to become more dominant as near the general elections in April. We should highlight that the second around of elections is more significant, which is due to take place at the beginning of May.

GBPCHF 4hr Chart

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The Weekly Update: Article 50 Is Looming

GBPCHF 4hr Chart 19/03/17

GBPCHF Strategy

We have been tracking GBPCHF since the reversed Head-And-Shoulders (H&S) was being painted on the 4hr chart. We were looking for corrective weakness in the last 4 hours of trading on Friday, which did not take place. Although GBPCHF is expected to gap lower at the time of this writing (which may change at the opening) it may be insufficient for force a re-test of the lower support line (in blue). As a result we are already anticipating limited drawdown in the cross, which may or may not materialize. There are multiple intraday resistance levels that may counter the bullish retracement as we displayed on the chart. We suspect the Consumer Price Index (CPI) that is due on Tuesday may be the trigger for anticipated gains. A sharp rise in the CPI may strengthen the possibility of a rate hike by the BOE, which will in turn reflect in general GBP strength in the Forex market.

As we updated all of our subscribers last week, the Swiss Franc (CHF) is slowly positioning itself for moderate weakness against a basket of currencies. We will cautiously say we may witness unusual volatility in CHF pairs and crosses within the next four months. We are expecting the SNB to re-apply the floor in EURCHF, however, we will not short CHF without a firm technical entry. The floor, if is indeed applied will done via a statement from the SNB without prior notice at anytime.

The trade alert will be updated on this page after it is issued via email after the opening of the Forex market.

GBPCHF Trade Alert

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The Weekly Update: Article 50 Is Looming

GBPCHF 4hr Chart II 19/03/17

GBPCHF long at market price (1.2358)
Take profit: 1.2550
Protective stop:1.2280
Risk Ratio (RR): 1 : 2.3 (approx.)
Estimated duration: 4 days

Note: This is a 4hr entry. We were hoping for a lower opening, there may be some drawdown as the price may re-test the lower support line as highlighted on the chart. There is no guarantee such a re-test will take place but it must be acknowledged.

21/03/17 UPDATE: GBPCHF is trading at 1.2399 at the time of this writing.

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The Weekly Update: Article 50 Is Looming

GBPCHF 4hr Chart 21/03/17

We are closing 20% of the long trade at market price and shift the protective stop to 1.2310.

21/03/17 UPDATE II: We are shifting GBPCHF protective stop to 1.2348 as it is a 4hr entry.

22/03/17 UPDATE: GBPCHF triggered the protective stop following heavy CHF buying. The terror attack in the UK forced the price to re-test the support for third time, which we did not expect. Although the support (in blue) contained the weakness and forced the price to correct higher we chose not to re-enter the trade.

EURAUD Trade Alert

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The Weekly Update: Article 50 Is Looming

EURAUD Weekly Chart 23/03/17

EURAUD short at market price (1.4125)
Take profit: 1.3720
Protective stop: 1.4255
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 28 days

Note: 1.4195 is the key level. We are attempting a tighter stop than what is demanded by the monthly chart. If timed correctly we may be in some profit within the next 24 hours, however, we must stress as this is a monthly entry some drawdown cannot be ruled out until the monthly close. We will present the weekly chart although it is a monthly entry as we the take profit order is established on the weekly chart.

We suspect the trigger for EUR weakness, which may not be limited against AUD may be as a result of the upcoming French elections.

CADJPY Entry Order

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The Weekly Update: Article 50 Is Looming

CADJPY Daily Chart 23/03/17

The recent volatility in JPY pairs and crosses are related to the US Healthcare bill. We may witness some volatility throughout the Asian session. CADJPY may briefly spike lower, which is why we decided to layer an entry order.

CADJPY buy limit at 82.70
Take profit: 84.45
Protective stop: 82.14
Risk Ratio (RR): 1 : 3 (approx,)
Estimated duration: 7 days

Note: We may cancel the order 60 minutes after the daily close if the order is not triggered by the market.

The entry order was cancelled as the price failed to trigger our order in the predetermined time frame we required.

29/03/17 UPDATE: EURAUD triggered the protective stop. We considered re-entering the cross following a weekly close. however, the selling has already began. We attempted a tighter stop than what was demanded by the monthly chart, which was unsuccessful.