The Weekly Update: GBP and the UK Supreme Court Strategy

Following the weekly close we noted several entries in the Foreign Exchange (Forex) market. We have been monitoring GBP pairs and crosses as we are aware the UK supreme court is due to make its ruling on the UK referendum following the government’s appeal in January, 2017. Our trading strategies for GBP are based on the weekly charts.

GBPAUD Weekly Chart

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The Weekly Update: GBP and the UK Supreme Court Strategy

GBPAUD Weekly Chart 08/01/17

The right-hand shoulder of the potential reversed H&S is being painted at the time of this writing. The difficult part is predetermine which support level will hold. 1.6710 is likely to act as the key support for GBPAUD, however, should it give way a second entry may present itself upon a re-test of the latter support (marked in blue). Initially it may appear GBPAUD gains may also materialize as a result of a weak Australian Dollar (AUD) but we have noted several entries in other GBP pairs and crosses that may suggest a strong GBP.

EURGBP Weekly Chart

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The Weekly Update: GBP and the UK Supreme Court Strategy

EURGBP Weekly Chart 08/01/17

Top H&S is also being painted in EURGBP, which may concrete our analysis for strong GBP in the Forex market. The price may re-test 0.8715 (which may affirm the right-hand shoulder), however, we suspect the 15MA (in orange) may act a strong resistance. The price may re-test the 15MA before reversing lower, which we must factor into the protective stop loss order. From a technical angle a stop above 0.8715 is appropriate but we are not layering a stop of +250 pips in EURGBP. Should we opt for the trade we will exercise the stop above the moving average. We should stress that such re-tests are never guaranteed.

GBPCHF Weekly Chart

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The Weekly Update: GBP and the UK Supreme Court Strategy

GBPCHF Weekly Chart 08/01/17

Similar to GBPAUD, a reversed H&S is also being painted in GBPCHF weekly chart. 1.2435 is the initial support, backed by the 15MA (in orange). If the support gives way a second entry may manifest itself around 1.2230. As several entries are noted in GBP pairs and crosses we anticipate the UK supreme court decision on the brexit to be the initial trigger for the rally. As we cannot eliminate the possibility of further weakness n GBP before reversing higher a limited drawdown must be anticipated. GBPJPY and GBPUSD appear to be an exception at the time of this writing. We may witness a strong USD and a strong JPY but a resilient GBP, which may explain why the market is indicating to avoid GBPUSD and GBPJPY but do note it is a mere speculation.

JPY Strategy

We have mentioned on Friday that we are anticipating a strong Japanese yen (JPY). The majority of JPY pairs and crosses require a relatively large stop aside Dollar yen. Although this is a monthly entry where the daily close on Friday may have affirmed the entry we are displaying the 4hr chart.

USDJPY 4hr Chart

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The Weekly Update: GBP and the UK Supreme Court Strategy

USDJPY 4hr Chart 08/01/16

The key resistance is seen at 117.08. Although the 4hr target is around 114.95, we are basing the take profit order on the monthly chart (113.50). There can be many potential triggers for a strong yen. One of the possibilities is soft economic data from China. To recap, China suggested the Gross Domestic Product (GDP) may fall at 6.4% or below. A sharp decline in the GDP may be sufficient to trigger risk aversion mode in global markets where the Japanese yen often tends to benefit from. China GDP is due next week, however, the Consumer Price Index (CPI) is due to be released at the early part of the week. We must decide at the opening of the market whether we wish to increase our exposure to the Japanese yen (due to our CADJPY short) or opt for GBP.

GBPCHF Trade Alert

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The Weekly Update: GBP and the UK Supreme Court Strategy

GBPCHF Weekly Chart II 08/01/17

GBPCHF long at market price (1.2465)
Take profit: 1.3120
Protective stop: 1.2280
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 25 days

USDJPY Trade Alert

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The Weekly Update: GBP and the UK Supreme Court Strategy

USDJPY 4hr Chart 04/01/17

USDJPY short at market price (117.07)
Take profit: 113.75
Protective stop: 118.30
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 5 days

09/01/17 UPDATE: USDJPY is trading at 116.47 at the time of this writing.

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The Weekly Update: GBP and the UK Supreme Court Strategy

USDJPY 4hr Chart 09/01/17

we are closing 30% of the short trade at market price and shift the protective stop to 117.11.

10/01/17 UPDATE: GBPCHF triggered the protective stop loss order, ending the trade with a loss. We are balancing our exposure and closing USDJPY short trade at market price (115.74).

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The Weekly Update: GBP and the UK Supreme Court Strategy

USDJPY 4hr Chart 10/01/17

We have ended USDJPY with a decent profit.

GBPAUD Trade Alert

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The Weekly Update: GBP and the UK Supreme Court Strategy

GBPAUD Weekly Chart 10/01/17

GBPAUD long at market price (1.6523)
Take profit: 1.7330
Protective stop: 1.6310
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 21 days

Note: GBPAUD provided us with an entry, similar to GBPNZD as well as EURGBP. The fact we are entering on an open candlestick (weekly) means the gains may materialize within 7 days. We prefer GBPAUD as AUD is more sensitive to economic data from China. 1.6350 is the key support, the potential drawdown is a re-test of the daily low. GBPAUD has already posted strong intraday gains at the time of this writing but we are still entering the trade.

10/01/17 UPDATE: We are balancing our exposure and closing USDJPY short trade at market price (115.74).

GBPNZD Trade Alert

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The Weekly Update: GBP and the UK Supreme Court Strategy

GBPNZD 4hr Chart 12/01/17

GBPNZD long at market price (1.7216)
Take profit: 1.7500
Protective stop: 1.7135
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 5 days

Note: This is a 4hr entry.

12/01/17 UPDATE: As we near the 4hr close we must shift the stop to the entry despite the minimal distance from the market. GBPNZD is trading at 1.7255 at the time of this writing, we are closing 20% of the long trade at market price and shift the protective stop to the entry.

12/01/17 UPDATE II: GBPNZD triggered the protective stop at the entry, GBPAUD protective stop was later triggered as Theresa May announced she will make her brexit speech next week, prior to the UK supreme court decision.

The Weekly Update: GBP and the UK Supreme Court Strategy

As all trades are closed this page can now be accessed by all traders. Open trades and relevant intraday strategies are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
The Weekly Update: GBP and the UK Supreme Court Strategy
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The Weekly Update: GBP and the UK Supreme Court Strategy