The Weekly Update: US Trade War and GBPJPY

US Trade War and GBPJPY

President Trump’s plan to slap China with tariffs of USD 60 billion may be sufficient to trigger a global trade war. The impact on the Foreign Exchange (Forex) market has been fairly muted although we have seen some USD weakness.

Based on the charts we do not expect the tension between the US and China to have a significant impact. There are some indications for USD strength (USDCHF and USDCAD) but we lack a firm entry. The market conditions have improve but we are not keen on being forced by the market to use excessively large stops. In terms of fundamental events, very little is happening at the time of this writing.

GBPJPY Signal Strategy

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The Weekly Update: US Trade War and GBPJPY

GBPJPY Daily Chart 25/03/18

We have been tracking GBPJPY for the past week. We had some indications for JPY strength, which is why we tightened CADJPY protective stop before it was triggered by the market. The potential entry in GBPJPY appears to be due to a firm GBP, we are not convinced JPY we will be a dominant factor.

The weekly update is kept brief as we noted earlier, very little has been in happening in global markets at the time of this writing.

GBPJPY Trade Alert

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The Weekly Update: US Trade War and GBPJPY

GBPJPY Daily Chart II 25/03/18

GBPJPY long at market price (ask 147.93)
Take profit: 151.50
Protective stop: 146.30
Risk Ratio (RR): 1 : 2.0 (approx.)
Estimated duration: 14 days (approx.)

Relevant as long as GBPJPY is below 148.55

Note: The potential drawdown is a re-test of 147.25

26/03/18 UPDATE: GBPJPY traded near the 150.20 resistance, which we marked on the chart. A daily close above 150.20 would have placed us in a better position from a technical angle.

In an event GBPJPY does post a daily close above 150.20 we may have the ability to re-enter but at the time of this writing we are unwilling to absorb the potential retracement to today’s gains. The rally has been much greater than we have originally anticipated.

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The Weekly Update: US Trade War and GBPJPY

GBPJPY Daily Chart 26/03/18

It was a tough decision but we decided to close GBPJPY long position at market price (150.01).

We will issue an update after the daily close.

USDCHF Trade Alert

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The Weekly Update: US Trade War and GBPJPY

USDCHF Daily Chart 26/03/18

USDCHF long at market price (ask 0.9458)
Take profit: 0.9645
Protective stop: 0.9375
Risk Ratio (RR): 1 : 2.3 (approx.)
Estimated duration: 14 days (approx.)

Relevant as long as USDCHF is below 0.9475

Note: The potential drawdown is a re-test of 0.9410. We must also highlight we are taking some risk in USDCHF.

27/03/18 UPDATE: We are shifting USDCHF protective stop to 0.9400

28/03/18 UPDATE: USDCHF posted fairly strong gains in today’s session. When such gains take place they are often followed by some retracement as we saw in GBPJPY although it has been fairly limited than what is often seen.

The price also re-tested 0.9580, which we marked on the chart. It is not an encouraging signal. As we have some indications for further CHF weakness we are shifting the protective stop to 0.9540 and close 30% of the long trade at market price (0.9567). This action is taken as the gains were stronger than we have anticipated.

29/03/18 UPDATE: USDCHF failed to break above 0.9580. We may have a long entry in USDJPY, however, it is not necessarily an indication that USDCHF will in fact break higher.

By the book we are meant to exit the trade as the resistance is holding. Again, this is another tough decision we have no technical support for remaining in the trade.

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The Weekly Update: US Trade War and GBPJPY

USDCHF Daily Chart 29/03/18

USDCHF is trading at 0.9565 at the time of this writing, we are closing the long trade at market price.

USDJPY Trade Alert

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The Weekly Update: US Trade War and GBPJPY

USDJPY Daily Chart 29/03/18

USDJPY long at market price (ask 106.46)
Take profit: 108.80
Protective stop: 105.40
Risk Ratio (RR): 1 : 2.2 (approx.)
Estimated duration: 14 days (approx.)

Relevant as long as USDJPY is below 106.80

Note: The potential drawdown is a re-test of 105.75. It is a fairly large potential drawdown for a daily entry but we are beginning to have firmer indications for a weak JPY within the next couple of weeks (approx.).

05/04/18 UPDATE:  USDJPY is trading at 107.39 at the time of this writing, we are closing 30% of the long trade at market price and shift the protective stop to 106.50.

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The Weekly Update: US Trade War and GBPJPY

USDJPY Daily Chart 05/04/18

The fear from a trade war between the US and China is beginning to ease, which is the only major fundamental event that took place this week. It has contributed to the recent JPY weakness along with some USD strength.

09/04/18 UPDATE: Reports are suggesting a US warship is on its way to Syria from Cyprus. We are taking greater precaution due to these reports and the possibility of safe-haven flows which may or may not materialize.

USDJPY is trading at 106.73 at the time of this writing, we are closing the long trade at market price.


AS THE OBJECTIVE OF THE STRATEGIES HAS BEEN MET THE ANALYSIS IS NOW ACCESSIBLE TO ALL TRADERS


The Weekly Update: US Trade War and GBPJPY

The Weekly Update: US Trade War and GBPJPY

Last Updated on April 22, 2018