The Weekly Update: The UK Referendum Outcome and NZD

Preliminary UK Referendum Prediction

We have successfully anticipated GBP weakness in the Foreign Exchange (Forex) market in ur prior trades in EURGBP and GBPJPY. The mass GBP selling were triggered by the polls that gave the ‘LEAVE’ camp the lead.

As we near the referendum date GBP volatility may increase but the upcoming Fed’s monetary policy next week may ensure GBPUSD volatility is contained. The monthly and weekly charts across a number of GBP pairs and crosses continue to conflict each other, which is a rather extraordinary event.

We would like to stress it is a preliminary prediction for the UK referendum as we may change our views after the Fed’s monetary policy. Although GBP monthly and weekly charts are currently conflicting each other, there is a scenario where the technical conflicts may be resolved. GBP pairs and crosses will have to post significant losses in order to meet the monthly charts’ initial objective before reversing higher, possibly in a single spike.

The ‘usual suspect’ for such reactions are the exiting polls, however, UK media insist they will not publish a traditional exit poll. The only poll that may be published is the private poll that has been ordered by hedge funds and investment firms. The private poll may allow traders from the investment firms to understand in which way the vote is shifting throughout the day. They cannot publish the poll until the voting closes. If the custom poll is published to the public (at or after 22:00 BST) and shows a clear majority for a Brexit it may be sufficient to initiate heavy GBP weakness. The corrective gains we are seeing as a possibility in the weekly chart may be as a result of the official count that may shows Britain chose to remain in the EU. What is supporting our preliminary UK referendum prediction is that the FTSE100 is not showing any technical signals for heavy selling. The FTSE100 weekly chart currently supports moderate gains in the index (key support at 6,060).

There are no guarantees this poll will be published or leaked (intentionally or unintentionally) at the time of this writing. It is also possible that only one of the charts, weekly or monthly will provide the correct trend for GBP following the UK vote. When we will near 23 June and we suspect our preliminary prediction may materialize we may layer entry orders in the market prior to 22:00 BST. We have already calculated the possible entries in multiple GBP pairs and crosses but they are irrelevant at the time of this writing until we near 23 June, 2016. If we do initiate any trades in GBP this week it we are unlikely to target the referendum.

We understand it may appear to be farfetched but it is one of the scenarios where the weekly and the monthly charts will not conflict each other. The other scenario, which is more disturbing is a terror attack, possibly on the referendum day. An extraordinary event must take place in order to fulfil the initial objective of the monthly charts.li

Any future strategies that are related to the UK referendum will be posted on this page.

09/06/16 UPDATE:  All GBP pairs crosses suggest moderate gains in the weekly charts. We have selected GBPCAD mainly due to the Canadian data that is due tomorrow. The recent dip lower provides us with a fairly clean entry to the market. This trade is not targeting the upcoming referendum. The chart we used will shortly be updated on the website.

Please click on the chart to enlarge:

GBPCAD Weekly Chart 09/06/16

GBPCAD Weekly Chart 09/06/16

GBPCAD long at market price (1.8391)
Take profit: 1.8870
Protective stop: 1.8200
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 14 days

10/06/16 UPDATE: GBPCAD survived the Canadian employment data but the UK referendum poll that was released triggered the protective stop loss order of the long trade. The poll gave the ‘LEAVE’ camp a 55% lead. We later discovered that the poll did not include a ‘don’t know’ option, which lacks credibility. That however did not prevent the market’s reaction to the release.

23/06/16 UPDATE: It is essential to highlight we were stopped out in GBPCAD due a spike (in this the lower shadow of the candlestick) before reversing higher to the take profit. The only reason we are mentioning this is because we were consecutively stopped out on spikes during our efforts to long GBP.

GBPCAD Weekly Chart 23 June 2016

Please click on the chart to enlarge:

GBPCAD Weekly Chart 23/06/16

GBPCAD Weekly Chart 23/06/16

The purple line is the protective stop loss order’s location, the green line is the set take profit, which was reached by the market.

GBPCHF Trading Strategy

Following heavy selling in the market, GBPCHF has reached key support level on the weekly chart.

Please click on the chart to enlarge:

GBPCHF Weekly Chart 12/06/16

GBPCHF Weekly Chart 12/06/16

Aside the support there is also a potential for reversed Head-And-Shoulders (H&S) where the neckline is diagonal. We also noted a potential entry in EURGBP but we do not wish to begin the week with large exposure to GBP.

GBPCHF long at market price (1.3745)
Take profit: 1.4260
Protective stop: 1.3619
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 12 days

13/06/16 UPDATE: The market triggered the protective stop in GBPCHF before making a full recovery. We suspect we were a victim of stop hunting operations that took place in the cross.

23/06/16 UPDATE: Similar to the above, we were stopped out on a spike, the market reversed and triggered our take profit. This is not the first time we are stopped out on a spike but it is the first time it occurred in consecutive trades.

GBPCHF Weekly Chart 23 June 2016

Please click on the chart to enlarge:

GBPCHF Weekly Chart 23/06/16

GBPCHF Weekly Chart 23/06/16

The purple line marks the stop, the green line the take profit.

GBPJPY Trade Alert

The question we are facing is whether there will be a re-test of the lows or not. The initial monthly objective was already reached and we are fairly convinced GBP is due to recover. If we set an entry order at a lower price and a re-test does not take place we may no longer have the ability to enter the trade. We are deliberately avoiding GBPUSD and EURGBP due to the Fed.

We are left with GBPNZD and GBPJPY. In GBPJPY 150.22 may be re-tested while in GBPNZD it is 2.0094. As GBPJPY stop is tighter we are likely to opt GBPJPY. If we do note a retracement we are saying in advance that we will increase our market exposure to GBP. Due to GBP corrective gains, 150.70 may be tested and it is the potential drawdown. We repeat that re-tests are not guaranteed

Due to the recent spike we have decided to layer the stop beneath the daily low. If a re-test of the lows take place we will increase our GBP exposure. The entry is based on the daily chart.

Please click on the chart to enlarge:

GBPJPY Daily Chart 13/06/16

GBPJPY Daily Chart 13/06/16

GBPJPY long at market price (150.96)
Take profit: 159.20
Protective stop: 149.04
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 10 days

23/06/16 UPDATE: Similar to GBPCAD, we were also hit by a spike in our efforts to long GBP before the gains materialized in the market.

GBPJPY Daily Chart 23 June 2016

Please click on the chart to enlarge:

GBPJPY Daily Chart 23/06/16

GBPJPY Daily Chart 23/06/16

The volatility was larger than we had initially expected. The purple line marks the stop loss order, the green line the take profit.

GBPNZD Trade Alert

We are increasing our exposure to GBP. We have used the 15min chart to derive the entry. We have noted the potential for reversed H&S on the hourly chart and using the current dip to enter a long trade in the market. The Evening Standard poll will seal the fate of our efforts to long GBP.

Please click on the chart to enlarge:

GBPNZD 15min Chart 14/06/16

GBPNZD 15min Chart 14/06/16

GBPNZD long at market price (2.0167)
Take profit: 2.0780
Protective stop: 2.0065
Risk Ratio (RR): 1 : 6 (approx,)
Estimated duration: 10 days

23/06/16 UPDATE: Similar to other GBP trades on this page, we were also stopped out on a spike in GBPNZD before the price reversed higher.

GBPNZD Daily Chart 23 June 2016

Please click on the chart to enlarge:

GBPNZD Daily Chart 23/06/16

GBPNZD Daily Chart 23/06/16

The reason why we are displaying the daily chart as the long entry was derived from there, we tried to capitalize over a dip on intraday time frames. The trade was in a profit (+90 pips) but the gains did not extend before the market triggered our protective stop in a spike.

The purple line market the price level of the stop, the green line the take profit.

The Weekly Update: The UK Referendum Outcome and NZD

AUDNZD Trading Strategy

 This week we are focusing on the New Zealand Dollar (NZD), inline with our prior projection for NZDUSD.

As we emailed last week, we noted a potential entry in NZDCHF but decided to remain on hold and wait for the weekly close. The natural trigger for NZD weakness maybe the Reserve Bank of New Zealand (RBNZ). Although many central banks tend to refrain from taking monetary policy actions prior to key market events there are multiple potential entries in the Forex market including GBPNZD, EURNZD, NZDCHF and AUDNZD.

We favourite AUDNZD due to the required stop and low holding costs when compared to other NZD pairs and crosses.

AUDNZD Weekly Chart

Please click on the chart to enlarge:

AUDNZD_Weekly_Chart_5_June_2016

AUDNZD re-tested 1.0526. which is a fairly strong support level on the weekly chart. When a support level is tested multiple times there is a concern the support will eventually give way. The hammer on the daily chart concretes the possibility for corrective gains.

We would prefer a gap lower in AUDNZD, which will reduce the required size of the protective stop. In a scenario where AUDNZD significantly gaps higher will consider exercising an entry order. We are refraining from GBP pairs and crosses for the time being.

AUDNZD Trade Alert Details

Please note AUDNZD may re-test 1.0526 before reversing higher. Such re-tests are not guaranteed but should be anticipated. We did consider exercising an entry order at a lower price but we decided to enter at current levels.

Please click on the chart to enlarge:

AUDNZD Weekly Chart II 05/06/16

AUDNZD Weekly Chart II 05/06/16

AUDNZD long at market price (1.0594)
Take profit: 1.1030
Protective stop: 1.0463
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 18 days

07/06/16 UPDATE:  AUD extended its gains in the Forex market. As we emailed earlier, exiting AUDUSD was a tough decision but we wished to limit our exposure to the Australian Dollar.

Please click on the chart to enlarge:

AUDNZD Weekly Chart 07/06/16

AUDNZD Weekly Chart 07/06/16

AUDNZD is trading at 1.0722 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.

EURNZD Trade Alert

The entry is based on the weekly chart. Current levels allow a long entry in the market as we are projecting a weak NZD. Although it did not occur with the RBA, the risk for a whipsaw reaction is in place, which toughens layering the protective stop loss order in the market. The key support is seen at 1.6075 where the 100 Moving Average provides the prior stop. We have decided to layer the protective stop below 1.6075 rather than below the 100MA to avoid the potential whipsaw reaction.

Please click on the chart to enlarge:

EURNZD Weekly Chart 08/06/16

EURNZD Weekly Chart 08/06/16

Please note it is not a tight stop as it is a weekly entry, EURNZD can easily trade over +300 pips in a single trading day.

EURNZD long at market price (1.6235)
Take profit: 1.6765
Protective stop: 1.6015
Risk Ratio (RR): 1 : 2.3 (approx.)
Estimated duration: 14 days

09/06/16 UPDATE: The RBNZ decided to remain on hold. Despite the statement that suggested further easing in future meetings, it appears there were high expectations for a rate cut. When that did not take place NZD benefited form moderate gains, which triggered AUDNZD stop at the entry and EURNZD triggered the protective stop loss order. We will admit the market reaction took us by surprie but we are moving on to the next trade.

The Weekly Update: The UK Referendum Outcome and NZD

As all trades in this page 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: The UK Referendum Outcome and NZD

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The Weekly Update: The UK Referendum Outcome and NZD

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The Weekly Update: The UK Referendum Outcome and NZD