GBP Technical Strategy
Our bullish projections for GBP appear to be in motion across a number of pairs and crosses in the Forex market. It is essential to highlight GBP reversal is expected to continue for several months, it difficult to predetermine what may be the initial trigger.
The spike lower on Friday was triggered on reports RBS will impose negative interest rate on large deposits. If more banks will follow it means we must be aware in advance for the recurrence of short-lived spikes in GBP pairs and crosses. What we must also determine is whether we wish to maintain such an exposure to GBP pairs and crosses rather than spread our risk in the market.
GBPNZD 4hr Chart
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GBPNZD Weekly Chart 21/08/16
GBPNZD 4hr chart shows the beginning of an uptrend, which is inline with the weekly chart. Due to the spike that triggered by RBS, we hope GBPNZD will gap lower at the opening of the Forex market. A gap higher will be more challenging as we it may dent the risk ratio of the long signal.
EURGBP Weekly Chart
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EURGBP Weekly Chart 21/08/16
We avoided EURGBP as we anticipated a strong Euro, however, it appears EURGBP uptrend has been exhausted. We can already determine the protective stop must be layered above 0.8760. We could opt for a 4hr entry but we prefer establishing the signal on the weekly chart.
We are unconvinced JPY buying is over, which is why we are avoiding JPY although EURJPY and AUDJPY are suggesting corrective gains may be seen. GBPAUD and GBPCHF require a lower price in order for us to consider an entry. GBPCAD requires a hefty stop despite a potential entry. We may opt for GBPCAD but only if a substantial gap lower takes place.
Italy Referendum
The Italian referendum is likely to have a significant impact on the market. As seen with the brexit, the polls may dictate the tone of numerous financial instruments. Once an official date for the referendum is announced (expectations are November 2016) we will begin focusing on all EUR pairs and crosses. As opposed to the UK, the referendum is likely to take place on a Sunday. If exit polls will be released (which did not place in the UK) gaps will be seen at the opening of the markets.
It is early to suggest the polls will play a role in GBP uptrend.
GBPNZD Trade Alert
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GBPNZD 4hr Chart II 21/08/16
GBPNZD long at market price (1.8015)
Take profit: 1.8430
Protective stop: 1.7902
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 7 days
EURGBP Entry Order
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EURGBP Weekly Chart II 21/08/16
EURGBP Entry Order (sell limit): 0.8695
Take profit: 0.8310
Protective stop: 0.8798
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 21 days
22/08/16 UPDATE: GBPNZD is trading at 1.8073 at the time of this writing. As this is a 4hr entry there is no need to wait for the daily close. We closing 20% of the long trade at market price and shift the protective stop to the entry.
Please click on the chart to enlarge:
GBPNZD 4hr Chart 22/08/16
We will be relatively close to the market but this was not a weekly entry.
22/08/16 UPDATE: GBPNZD spiked lower, triggering the protective stop that was shifted to the entry. We have ended the trade with a minor profit.
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Last Updated on September 13, 2016