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GBP/USD to retrace part of the Brexit decline

al_dcdemo Posted 23 Aug. as Analysis on GBP/USD, Target: 1.3475, Date: 3rd of October, 12:00 GMT  in #Technical analysis #GBP/USD #Daily Chart #Weekly Chart #Technical Tools #Declining Wedge #Net Short Positioning #Brexit #Record Daily Range
Technical Tools
Support and resistance (S/R). Price levels, trendlines and Fibonacci retracements. Price action, candlestick and chart patterns. Simple moving averages (SMA). Commitments of traders (COT) indicator, which displays speculative positioning in FX futures market, used as a proxy for speculative positioning in spot FX market.
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The declining wedge that the Cable has been carving out during the past two years has been pierced on both sides in one of the most volatile weeks …
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al_dcdemo 19 Sep.

UPDATE 6: Week ahead will be among the most important ones this year. Even though the market discounts little chance of a Fed hike in September, the meeting will shape expectations for whether we'll get one this year at all. Perhaps even more important will be the decision from the BOJ. The bank has been struggling with deflation and upward pressure on the yen for decades - can they finally put end to that? The RBNZ is another central bank that meets this week. No action from them is widely expected, they cut rates in August.

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al_dcdemo 22 Sep.

UPDATE 7: FOMC kept the federal funds rate steady at yesterday's meeting. The outcome was widely anticipated though there were still a lot of players expecting an early hike.  It was a "hawkish hold" with the committee sending a strong implicit signal that the second hike is not far away, barring any economic shocks. The U.S. dollar fell after the decision and extended its losses in today's European session. It then recouped a big part of the losses in the N.A. session which is consistent with a very real prospect of a rate hike in December.

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al_dcdemo 26 Sep.

UPDATE 8: Major currencies ended the first day of the week mixed but mostly higher against the U.S. dollar. The winner was the yen which approached the strong 100 level once again. A convincing break below it could send few ripples through the FX market, particularly via crosses such as GBP/JPY, AUD/JPY and NZD/JPY. Canadian dollar was the loser of the day, following through on the weakness after Friday's inflation and retail sales reports. Market focus is now turning to the U.S. elections. It's also the last week of the quarter so we may well witness some heavy position squaring flows.

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al_dcdemo 30 Sep.

UPDATE 9: The U.S. dollar ended the month higher against the pound and the Canadian dollar but it closed lower against the euro, the franc, the yen and the antipodean dollars. It was a great month for range traders while trend followers are still waiting for a real breakout (higher timeframes). They may not have to wait for too long. Contracting ranges will sooner or later give way, in one or the other direction. Uncertainty around U.S. presidental election and potential for a December FOMC rate hike should keep the dollar supported in the fourth quarter.

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al_dcdemo 3 Oct.

UPDATE 10: PM May announced yesterday that the U.K. will invoke article 50 by the end of March 2017. That will leave the country two years to negotiate terms of its exit from the E.U. with the rest of the union's members. Cable opened about 50 pips lower from late Friday's levels. It extended the decline in the European morning, to below August low (~1.2865), before pulling back. July low (~1.2795) is the next target. 1.2950 - 1.30 seems like a good sell zone.

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GBP/USD to retrace part of the Brexit decline

al_dcdemo Posted 26 July as Analysis on GBP/USD, Target: 1.3575, Date: 1st of September, 12:00 GMT  in #Technical analysis #GBP/USD #Daily Chart #Weekly Chart #Technical Tools #Declining Wedge #Net Short Positioning #Brexit #Record Daily Range
Technical Tools
Support and resistance (S/R). Price levels, trendlines and Fibonacci retracements. Price action, candlestick and chart patterns. Simple moving averages (SMA). Commitments of traders (COT) indicator, which displays speculative positioning in FX futures market, used as a proxy for speculative positioning in spot FX market.
Weekly Chart
The declining wedge that the Cable has been carving out during the past two years has been pierced on both sides in one of the most volatile weeks …
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al_dcdemo 10 Aug.

UPDATE 5: Cable has looked heavy since last Thursday's BOE meeting. Friday's NFP report didn't do it any favours. The pair has posted five consecutive down days since last Wednesday. That said, bears were not really convincing so far this week as was not yesterday's (fake) breakout below 1.30. A sustained hold below the big level will be needed or else we may see a larger short squeeze.

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al_dcdemo 15 Aug.

UPDATE 6: Another quiet weekly opening as thin summer trading continues. The seven major currency pairs traded in 20-30 pip ranges during the Asian session. Data wise, we have a busy week ahead. U.S. will release inflation report and FOMC meeting minutes. U.K. will report inflation, labour market and retail sales data. Australia and New Zealand will publish labour force reports. We'll get the latest readings on Canadian inflation and retail sales. All in all, this points to a little bit more action than implied by the opening.

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al_dcdemo 17 Aug.

UPDATE 7: Many participants positioned for the U.S. dollar strength ahead of the release of the FOMC meeting minutes, encouraged by yesterday's hawkish comments by the NY Fed president Dudley. The minutes were less hawkish than expected in that only a few members felt that a rate hike was needed. Majority would like to see some more data before taking that decision. The dollar made its customary round-trip, taking stops on both extremes, before returning to pre-release levels. The commodity currencies ended the day lower while the rest of the G7 closed near unchanged for the day.

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al_dcdemo 22 Aug.

UPDATE 8: U.S. dollar opened the week with a significant gap in its favour. Weekend comments by the Fed's Stanley Fischer were cited as a contributing factor though it all looks like a simple continuation of the last Friday's pullback. The calendar for the week ahead is relatively light with the main event, a speech by the Fed governor Janet Yellen, coming in at the end of the week. At the moment it seems we'll get a bit of a dollar strength ahead of the event as the market discounts rising (albeit still low) odds of a rate hike by the Fed later this year.

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al_dcdemo 30 Aug.

UPDATE 9: Last Friday's speech by Fed Chair Yellen seems to have, at least temporarily, reversed the U.S. dollar weakening trend. Major currencies have been impacted to various degrees. BOJ's Kuroda comments over the weekend about room for further monetary policy easing made the yen the weakest of the currencies followed by the Canadian and the Australian dollars. Cable seems to be the most resilient and is down just marginally on the week, in part probably due to a lack of new sellers as implied by record net and gross short positions in FX futures.

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GBP/USD may test 1.30 in the weeks ahead

al_dcdemo Posted 25 June as Analysis on GBP/USD, Target: 1.3425, Date: 1st of August, 12:00 GMT  in #Technical analysis #GBP/USD #Daily Chart #Weekly Chart #Technical Tools #Declining Wedge #Net Short Positioning #Brexit #Record Daily Range
Technical Tools
Support and resistance (S/R). Price levels, trendlines and Fibonacci retracements. Price action, candlestick and chart patterns. Simple moving averages (SMA). Commitments of traders (COT) indicator, which displays speculative positioning in FX futures market, used as a proxy for speculative positioning in spot FX market.
Weekly Chart
The declining wedge that Cable has been carving out during the past two years has been pierced on both sides in one of the most volatile weeks in t…
Read full story
Translate to English Show original

Since you are not logged in, we don't know your spoken language, but assume it is English
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9 Comments
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al_dcdemo 11 July

UPDATE 5: June's NFP report suggested that the figure for May was just a fluke and that the U.S. jobs market is still strong. Having said that, its performance graduated somewhat over the past year which is in line with diminishing slack in the market. Immediate reaction was to buy the dollar but, after few whipsaws, prices mostly settled near pre-release levels, with a slight risk-on bias. Talking about risk-on, S&P 500 futures posted a new all time high overnight, barely two weeks after Brexit.

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al_dcdemo 14 July

UPDATE 6: Big day for the pound today as the BOE conclude its first meeting post Brexit. Many expect them to cut the official cash rate by 0.25% and perhaps add some QE. That would likely resume the downtrend in the pair. A surprise decision to stand pat would most probably be accompanied by a strong hint on action in August. The pair would rally on further short covering but the upside would be limited.

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al_dcdemo 22 July

UPDATE 7: One-off flash Markit PMIs for U.K. services and manufacturing came in at 47.4 (vs. 48.9 expected) and 49.1 (vs. 47.8 expected), respectively. A fall in the services index rises odds of a rate cut by the BOE in August. Cable lost about 100 pips so far after the release and is currently stalling near yesterday's low (~1.3150). The next stronger support levels are Wednesday's low (~1.3065) and 1.30. In case of a rebound, 1.32 - 1.3225 looks like a decent resistance.

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al_dcdemo 30 July

UPDATE 8: One could argue that the FOMC missed a perfect window to hike the federal funds rate. Brexit disruption proved to be a minuscule one, labor market bounced, inflation expectations recovered, data improved overall and stocks are trading at or near all time highs. Advance GDP came in much weaker than expected on Friday but will likely be revised towards 2.5% in the following two revisions. It seems that "gradually and cautiously" means one 0.25% hike per year at the most. That means no hike in September with December a much more probable date.

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al_dcdemo 31 July

UPDATE 9: Currencies staged an impressive reversal against the U.S. dollar last week after a combo of dovish Fed and much weaker than expected Advance GDP report. The yen was the biggest beneficiary as it gained about 400 pips on the week, helped by a lack of stimulus actions from the BOJ. Commodity currencies rallied with the New Zealand dollar a star performer and the Canadian dollar a bit of a laggard. The euro and the franc also rallied strongly with the pound quite behind but still well in the green. Price action points to further losses for the dollar in the week ahead.

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