Gold Climbs Higher After Extremely Handsome Price Action Setup

Gold is marching higher after one of the most handsome price action setups ever.

Silver also joins the bullish party and denies the Head and Shoulders pattern.

The EURUSD climbed higher after the Inverted Head and Shoulders bounced from the 38,2% Fibonacci.

The USDCHF is in a correction mode aiming for the crucial support of 0.93.

The EURPLN dropped lower after a false bullish breakout from the ascending triangle.

The USDCAD is very close to ending a long-term bearish trend.

The GBPCHF is seeing a very sweet drop, which has a great chance to be one of the best trades in terms of risk to reward ratio.

The NZDCHF fell after the price ended a flag pattern with a head and shoulders pattern. A test of the up trendline seems imminent.

For a look at all of today’s economic events, check out our economic calendar.

GBP/JPY Vs GBP/USD and USD/JPY – March 6th, 2021

GBP/USD last week fell 236 pips from 1.4015 to 1.3776 while overbought GBP/JPY rose 257 pips from 148.14 to 150.71.

Known since the 1930’s, the Japanese pegged GBP/JPY to UK Gold for not only economic viability but the first incursion to the western world of finance. The standard to hold GBP/JPY to the UK held throughout Bretton Woods. Upon the 1972 free float, GBP/JPY became attached permanently with high +90% correlations to GBP/USD.

All JPY cross pairs followed with high and positive correlations as AUD/USD and AUD/JPY, NZD/USD and NZD/JPY, EUR/USD and EUR/JPY while USD/CAD and CAD/JPY became polar opposites as both permanently correlate negatively. USD/CHF and CHF/JPY traditionally also hold opposite correlations.

The Japanese offered not only a double trade but GBP/JPY and GBP/USD as the same exact currency pairs. The same principle holds true for EUR/JPY and EUR/USD, AUD/USD and AUD/JPY and NZD/USD and NZD/JPY. The double trade is permanent for USD/CAD and CAD/JPY.

Why JPY cross pairs remain overbought into week 6 amd not falling with counterpart currencies is the USD/JPY problem to correlations. While GBP/USD correctly correlates to GBP/JPY at +94%, GBP/JPY also not correctly correlates to USD/JPY at +83%. A further problem exists as GBP/USD correlates to USD/JPY at +46 %. All correlations are not only running positive but this situation is the exact same for AUD/JPY, NZD/JPY, EUR/JPY, CAD/JPY and explains why prices remain high and overbought.

Positive correlations are the result of exchange rate prices and relationships to moving averages since correlations are found within the context of averages. USD/JPY trades above vital 105.70,  GBP/USD above 1.3697 and GBP/JPY above 144.80. Correlations are positive because prices trade above respective high / low averages.

Required to assist GBP/JPY to drop is GBP/USD breaks 1.3697 or USD/JPY trades below 105.70. GBP/JPY then decides to fully correlate to USD/JPY or GBP/USD. GBP/JPY in every instant follows GBP/USD as the 91 year correlation and order of currency markets.

Current GBP/JPY trades 1156 pips above GBP/USD and 2506 pips below GBP/CAD. GBP/JPY larger range from GBP/USD becomes 144.08 and 1.5564. GBP/JPY above is located the 14 year average at 155.38 and the 10 year at 148.36.

Prior to the 2016 interest rate changes by the central banks, the market order to currency pair arrangement existed as GBP/USD, GBP/JPY, GBP/CHF then GBP/CAD.

The new order is arranged as GBP/CHF, GBP/USD, GBP/JPY then GBP/CAD and seen as GBP/CHF 1.2855, GBP/USD 1.3820, GBP/JPY 149.86 or 1.4986 then GBP/CAD 1.7292. Much daylight exists for GBP/JPY to trade freely between GBP/USD and GBP/CAD yet 250 pips traded last week from a distance of 1100 and 2500 pips between exchange rates.

Why GBP/CHF and all currency  pairs arranged as Other Currency / CHF dropped from contention as support is due to the uniqueness to the SNB’s interest rate system. Libor is miles from actual interest rates as first comes Saron, Call Money rates and the most vital Debt Register Claims.

JPY cross pairs overall contain downside moves from GBP/JPY at 300 pips and 200 for AUD/JPY and NZD/JPY.

USD/JPY for the week is not only light years overbought but the 5 year average is located at 109.01. A good target is found at 106.65.

GBP/JPY big break lower is located at the 10 year average at 148.38. A break then GBP/JPY trades 146.00’s easily.

GBP/USD this week opens between 1.3768 and 1.3840. Below 1.3768 challenges most vital 1.3697, above 1.3840 then GBP/USD travels much higher.

GBP/CHF and GBP/CAD run good and positive correlations at +93% and +96 % for GBP/CAD. For GBP/NZD and GBP/AUD remain problems as correlations run negative at -43% and -64% for GBP/AUD.

GBP/JPY

Included are GBP/JPY moving averages from 5 day to 253 days. The averages are perfect and derived from the ECB. The first number is the day average followed by trading days then the average.

A 20 day average is actually 15 days, a 50 day average is actually 36 days. Trading day averages to factor perfectly start at the beginning of every year then the numbers increase as days trade. A 50 day average is most stable as it only trades 36 to 50 days.

A 5 day average begins Monday at 2 days, then 3 for Tuesday and Wednesday and 4 for Thursday. A full 5 day average only trades on Fridays.

5 Day     5             149.2391

10 Day  9             149.1325

20 Day  15           148.3808

50 Day  36           145.2691

100 Day               71           142.5398

200 Day               143       139.9417

253 Day               180       139.1231

As GBP/JPY trades lower then the averages drop.

Targets

Targets are not only known miles ahead but targets stack to watch trades unfold.

Current targets: 149.7549, 149.8496, 149.5086, 148.1852, 146.0887, 143.7901, 143.0356.

The ECB and most central banks factor exchange rates to 6 decimal places and 4 for USD/JPY and JPY cross pairs and I follow the ECB exactly.

Indices and Commodities Climb Higher

Commodities are enjoying the weaker USD and advancing higher.

Indices also going up, not disturbed even by new lockdowns.

EURUSD is about to test crucial horizontal resistance.

EURJPY in a sideways trend below 126.7.

AUDJPY with an inverse head and shoulder and breakout of a long-term down trendline.

USDCAD still near lows after the breakout of major horizontal support.

GBPCHF with a breakout of the lower line of the triangle.

EURAUD with a possible false bearish breakout from the rectangle.

For a look at all of today’s economic events, check out our economic calendar.

GBP/CHF Sellers are Within the Confluence Zone

The GBPCHF is bearish. Price is currently retracing and if it gets to the POC zone, we might be expecting a drop lower.

1.1900-1.1890 is the POC zine . 88.6 makes a strong confluence with the W H4 camarilla pivot. We can also see historical sellers there. If the market makes a reversal pattern in the zone, the price should drop. Targets for the move are 1.1850 and 1.1795. On a further momentum down we might see 1.1765. There is also a big market risk in the GBP trading due to uncertainty about Brexit so be careful regarding risk you take per trade.

For a look at all of today’s economic events, check out our economic calendar.

 

GBP/CHF Should Stay Below W H3 for Bears to Dominate

1.2635 zone is bearish for the pair. Rejections below are targeting 1.2596 and 1.2541. However a 4h close above 1.2635 might make a bullish move towards 1.2680. At this point we could see a continuation lower but watch for the GBP news today. Below 1.2541 we should see a move down towards 1.2495.

The Analysis has been done with the CAMMACD.Core and Sit Systems

GBP/CHF CPI Data Will Provide Direction

Dear Traders,

The GBP/CHF is having a retracement, but the next move will be decided after the GBP CPI news.

The CPI defines a change in the price of goods and services purchased by consumers as consumer prices account for a majority of overall inflation. This is the very important data for the GBP. Better than expected result targets 1.2300 zone and 1.2300-20 could be good for potential short trades. If we see a rejection to the downside after the retracement pay attention to 1.2277, 1.2226 and 1.2200. If the price breaks 1.2345, bearish scenario will be invalidated.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

GBP/CHF Needs To Break 1.2334 For Bearish Continuation

Dear Traders,

The GBP/CHF has formed a bearish zigzag pattern and we might see either continuation or a bounce. Look for a retest of W L3 camarilla.

If the price doesn’t close below 1.2334, we could see a bounce towards the POC zone. It is clearly visible on the chart with W L3 and descending trend line confluence. 1.2390-1.2405 could reject the price down towards 1.2350. However only below 1.2334 the pair will be targeting 1.2323 and 1.2300. A bullish close above 1.2408 will negate this scenario. At this point the price is still sold on rallies.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

GBP/CHF Bearish Continuation Towards 1.2633 If 1.2700 Fails

Dear Traders,

The GBP/CHF has formed a bearish zigzag which is very strong on both intraday and higher timeframes. The price looks determined to push towards lower support levels. –>

The POC zone 1.2800-20 should reverse the price on a bearish candlestick formation after a retracement, if it happens. At this point the price is supported slightly above D  L3, which could indicate a possible upside correction. If we don’t see any retracement pay attention to 1.2746 and 1.2710. The loss of 1.2710 support should initiate another bearish breakout towards 1.2650 and 1.2633. Only a close above 1.2914 would temporarily negate a strong bearish momentum in the GBP/CHF pair.

The analysis has been done with the
CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

The Beauty of EURGBP and GBPCHF Forex Pairs

This article is for those of you who would like to develop something I call a “Trump Tweets Proof” trading strategy. President’s Trump’s surprising comments on Twitter can swing markets. They are an example of events that are not only themselves unpredictable but also can move the price of a USD-based instrument either way.

It’s challenging to develop an effective trading strategy when you have to verify your methods against such events.

Searching for “Trump Tweets Proof” forex pairs

Unless you are a master forex trader or you’d like to take an enormous risk, you should consider trading any combination of the so-called eight major currencies. These are merely the currencies of the world’s biggest economies.

Here are the eight major currencies:

  • The US Dollar (USD)
  • European Euro (EUR)
  • Japanese Yen (JPY)
  • British Pound (GBP)
  • Swiss Franc (CHF)
  • Canadian Dollar (CAD)
  • Australian/New Zealand Dollar (AUD/NZD)
  • South African Rand (ZAR)

Why USD is better for you than, let’s say, the Thai Baht? Because there’s a much bigger volume of USD in the circulation and therefore it should be less susceptible to big players manipulating it.

There are many uncertainties in the forex market – that is why you should take a “negative road” – know what you’d like to avoid. And it’s best to avoid big players (such as international banks) using their size to trade against the crowd – that is all the smaller investors including you.

Choosing a significant currency is a good solution. However, trading the most popular USD pairs can also prove to be the wrong decision. The most popular currencies can also potentially be played.

In this post, I will present the advantages of trading so-called “cross pairs” – the currency pairs that don’t involve the US dollar.

The Swiss franc, British pound and euro are big enough but not as popular as USD, which is dominating forex trading. The most traded pair in the world is EURUSD. It seems to be just a fashion because there aren’t many rational reasons to do it.

First of all, the instrument you want to trade using chart analysis should be trending most of the time. Whenever it’s an uptrend or a downtrend you can make money trading CFD. It’s much more difficult to do so when there’s no visible trend. And with EURUSD it happens often.

Second, EURUSD as the most popular pair is at the center of interest of the biggest forex players (including international banks). This raises the risk of somebody with market share significant enough to go against the crowd.

Following this logic, you should try to avoid USD pairs. This makes GBP, CHF, and EUR more attractive.

Let’s take the euro. Since it’s the currency of Eurozone – which consists of 19 countries – it’s less affected by macroeconomic news such as nonfarm payroll (NFP), which can cause a turmoil in all USD instruments.

The political events in the Eurozone countries also have a limited effect, since their influence is somehow diluted. Even if German Chancellor Angela Merkel started to tweet like Donald Trump, it would cause less market stir.

The history shows that euro pairs (except for EURUSD) are not affected by news from America. This replaces unpredictability of Donald Trump with a boring, predictable economist Mario Draghi, who has been the president of the European Central Bank since 2011.

Now let’s take a look at pound sterling. The historical data shows that the currency does not correlate with the Swiss franc as much as euro (for a long time the two were pegged together) or as USD and Japanese yen, who often react to random global events similarly since they are considered to be a safe haven.

The good thing about the Britins pound pairs is that they seldom stagnate. You can trade with or against the trend most of the time. This is an environment much more natural to make a profit in. The UK related events are much easier to grasp, as there are just fewer of them.

The Swiss franc is the most “news resistant” of all the eight major currencies which increases the currency’s predictability substantially.

Now let’s take a look at the two pairs I’m discussing in this post.

The EURGBP is a slow instrument. It has a low average true range (ATR), which means the volatility is low; however, the trends are active and visible. That is why it’s great for people wanting to develop their trading skills not worrying about the NFP or tweets. The pair is trending strongly over time and seldom stagnates. This is why you can test your trading signals with it efficiently. There is much less noise here than in case of other pairs.

On the other hand, the GBPCHF is much faster, with higher ATR. The pair is also tweet-proof. It also trends even better than EURGBP.

If you are not interested in news trading – and that’s what this article is about – avoid trading or having some strong positions open during the upcoming Brexit (or no Brexit) milestones.

If all three discussed currencies are so attractive, you may wonder why not trade EURCHF. The reason is simple – there’s a relatively short history of the two currencies moving independently. They have been closely correlated for years until the Swiss franc was set loose at the beginning of 2015. We are learning more and more about the pair so that it may be an exciting option soon.

A good piece of advice for the risk-averse traders, or the ones that’d like to practice before taking on a substantial risk is not to trade the two pairs at the same time, since this creates a position where you are too much exposed to the pound, which can be risky when something big happens, especially Brexit-related.

EURGBP daily chart – nice trends from Feb 2016 (you can see the Brexit referendum candle). It’s less volatile than GBPCHF but relatively rarely consolidates, and when it does signal it with the volume.

As you can see GBPCHF trends strongly and show almost no consolidations. It’s volatile with a proven record of no crazy unexpected moves that would blow your position up.

EURCHF used to be untradeable due to the Swiss franc being pegged to euro. You can see when it was finally released.

You can give you a new strategy a try and trade all the mentioned pairs with SimpleFX.

Sterling Lower Ahead of BoE Super Thursday, Dollar Rallies

The story defining the Pound’s steep depreciation in recent days continues to revolve around Brexit-related uncertainty and a broadly stronger US Dollar.

Much attention will be directed towards the Bank of England policy meeting which should offer fresh insight into the health of the UK economy. It’s widely expected that UK interest rates will probably be left unchanged today, attention will be directed towards the language of the policy statement, inflation forecast and whether there is split in the MPC vote.

The Sterling still appears heavily depressed but could be thrown a lifeline, if the BoE hints a rate hike in 2019 on the condition a soft Brexit or no Brexit at all. Alternatively, buying sentiment towards the Pound is seen taking a major hit if the central bank rules out a hike this year due to the endless uncertainty created by Brexit.

What would be seen as a major threat to the Sterling resuming its painful descent would be if the BoE issues a downbeat policy statement, suggesting a downward revision in growth and inflation forecasts which obstruct the need to raise rates.

Away from the BoE meeting, Theresa May will be flying to Brussels today on a mission to secure further concessions from the EU. With the European Union already making it clear that the withdrawal agreement is “not open for re-negotiations”, it will be interesting to see how her trip plays out. The Pound is seen weakening if she returns back to London empty-handed. However, a rebound could in the cards if expectations start to mount over the government extending Article 50.

Taking a look at the technical picture, the GPUSD is bearish on the daily charts. The current support around 1.2900 could transform into a dynamic resistance that encourages a decline towards 1.2840. If 1.2900 is able to prove reliable support, prices are seen trading back towards 1.3000.

In the currency markets, the Dollar has extended gains against a basket of major currencies this morning. With the currency on a six-day rally streak, bulls have clearly won the battle this week. However, the upside is still likely to face headwinds down the road as markets still expect the Fed to take a pause on rate hikes this year. Focusing on the technical picture, the Dollar Index is seen challenging 96.80 in the near term.

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Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Important GBP Pairs’ Technical Outlook: 23.01.2019

GBP/USD

Following its gradual recoveries since week-start, the GBPUSD again confronts four-month old resistance-line, around 1.2980, which if broken on a daily closing basis can propel the pair towards another important resistance, namely the joint of 200-day SMA and downward slanting trend-line stretched since June 2018, around 1.3080-90. Given the pair manage to print a D1 close beyond 1.3090, also clears 1.3100 mark, it may aim for 1.3180 & 1.3260 numbers to north. If at all the pair again fails to surpass the trend-line barrier, the 1.2910, the 1.2820 and the 50-day SMA level of 1.2755 could regain market attention before highlighting the 1.2700 mark including immediate support-line. Let’s say sellers fetch the quote under 1.2700 then the 1.2615 & 1.2570 might flash on their radars to target.

GBP/JPY

GBPJPY also ticked beyond 50-day SMA level of 142.20 but has to provide a daily closing bigger than that to please buyers with 144.00 and the 100-day SMA level of 144.50. However, 200-day SMA level of 145.55 may confine the pair’s rise after 144.50, if not then 146.00 & 146.80 may become optimists favorites. Meanwhile, the 140.90-80 and the 139.90-70 seem adjacent support to watch during the pair’s U-turn ahead of giving importance to 139.00 rest-point. Should prices keep trading southwards below 139.00, the 137.30 & the  135.75 might offer intermediate halts to its drop in direction to 132.35.

GBP/CAD

In spite of crossing the 1.7310-20 horizontal-region, the GBPCAD could find it hard to extend latest up-moves as an upward slanting trend-line, at 1.7365, adjacent to the 1.7400, might challenge the Bulls. In case the pair refrains to respect the 1.7400 resistance, the 1.7465 and the 1.7500 are likely following levels to appear on the chart. Alternatively, the 1.7250 may act as nearby support for the pair, breaking which lower-line of “Rising Wedge” formation, around 1.7155, can grab the limelight. If the pair slips below 1.7155, it confirms the short-term bearish pattern and could open the gate for a plunge towards 1.7050 & 1.7000 psychological magnet.

GBP/CHF

With the clear break of ten-month old descending trend-line and 200-day SMA, the GBPCHF may rally to 1.3030 and then to 1.3110 but the 1.3170 and the 1.3265-75 area could play their role of resistances afterwards. Given the pair’s rise above 1.3275, the 1.3390 and the 1.3450 can be aimed if holding long positions. On the contrary, a D1 close beneath 1.2920 may reprint 1.2875 and the 1.2830 as quotes while 1.2770 could entertain the pessimists then after. During the pair’s decline past-1.2770, the 100-day SMA level of 1.2750 and the 1.2660, including 50-day SMA, might offer rest to the downturn.

Important CHF Pairs’ Technical Overview: 10.01.2019

USD/CHF

In spite of dropping to the lowest levels in fifteen-weeks’ time, the USDCHF still bounced off the eleven-month long ascending support-line, at 0.9710, which together with near oversold RSI signal brighter chances of the pair’s pullback moves to 0.9790 & 0.9840 immediate resistances. Should the pair manage to conquer 0.9840 barrier, the 200-day SMA level of 0.9885, the 0.9915 trend-line resistance and the 0.9950, including 50-day SMA, can entertain the buyers. In case prices close beneath 0.9710, also dip under 0.9700 round-figure, on a D1 basis, the 0.9680, the 0.9630 and the 0.9600 may flash on the chart. Moreover, pair’s sustained downturn below 0.9600 might not hesitate visiting the 0.9580 and the 0.9530 rest-points.

CHF/JPY

Having reversed from 111.25-40 resistance-region, the CHFJPY is likely declining towards 110.00 and then to 109.70 before testing the 109.20 support. Given the quote slips under the 109.20, the 108.60 and the 108.20 may regain market attention prior to highlighting the recent low around 106.15. Alternatively, a clear break of 111.40 could help the pair to rise in direction to 111.90 and 112.80-90 hurdles to north. Though, pair’s successful rally above 112.90 can please Bulls with 113.50 & 114.00 levels.

GBP/CHF

With the short-term descending trend-line restricting the GBPCHF upside, the pair is likely to aim for 1.2375-65 support-zone, breaking which 1.2285 might appear on sellers’ radar. If Bears refrain to respect the 1.2285 mark, the 61.8% FE level of 1.2165 should be targeted while holding short positions. Meanwhile, break of 1.2510 resistance-line can accelerate the pair’s recovery to 1.2590-1.2605 resistance-area. Assuming the buyers’ capacity to cross 1.2605, the 1.2670 and the 1.2710 could become their favorites.

AUD/CHF

AUDCHF presently rises to confront the 0.7030-45 broad resistance that’s been limiting the pair’s upside since three-weeks. If at all the prices surpass 0.7045, the 0.7070 & the 0.7100 could offer intermediate halts during their rally to 0.7150. On the contrary, 0.6960 support-line seems adjacent rest for the pair, breaking which it can dip to 0.6885 and 0.6825. However, extended south-run past-0.6825 can recall 0.6675 as a quote.

GBP/CHF T-89 Has Been Established at the POC Zone

Hi traders,

The GBP/CHF has formed a T-89 pattern within the POC zone. We can also spot a bullish SHS pattern preceding the T-89.

A bounce from the 1.2495-1.2505 targets 1.2546 and 1.2573. Final target is 1.2610 but it might be achieved only on strong momentum above 1.2675. However, if the price closes below 1.2480 the target will be 1.2442. Generally, the bullish trend is prevailing so a bounce is technically more valid than a drop. ANY Brexit headline might mess up the technicals so pay attention!

(The analysis has been made by ecs.CAMMACD.MTF trading template)

For more daily wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

Technical Outlook For GBP/USD, GBP/JPY, GBP/AUD & GBP/CHF: 13.12.2018

GBP/USD

Unless breaking the 1.2715-20 resistance-confluence, GBPUSD’s recent pullback can continue nurturing doubts about its strength to target the 1.2850 level. Additionally, pair’s successful trading beyond 1.2850 may still struggle to confront the 50-day SMA level of 1.2900 and the 1.2935, comprising 100-day SMA. Should prices rally above 1.2935 on a daily closing basis, the 1.3000 and the 1.3145-50 can entertain Bulls ahead of challenging them with 1.3210 resistance-line and the 200-day SMA level of 1.3260. In case the pair fails to sustain latest up-moves, the 1.2600 and the 1.2550 may act as immediate supports, breaking which 1.2470 could regain market attention. However, pair’s slide beneath 1.2470 might not hesitate flashing the 1.2350 and the 1.2310 on the chart.

GBP/JPY

Contrast to GBPUSD, the GBPJPY just broke an adjacent resistance-line but has to cross the 144.20 and the 144.50 in order to aim for the 145.10, the 145.80 and the 146.00 consecutive upside landmarks. Given the pair’s ability to rise above 146.00, the 146.50, the 146.80 and the 147.30 can please the buyers. Alternatively, the 142.80 and the 142.00 may offer nearby rests to the pair, which if broken might further drag it to 141.50 and the 141.15. Assuming the pair’s refrain to respect the 141.15 mark, the 141.00 and the 61.8% FE level of 140.45 could appear on sellers’ radar.

GBP/AUD

Not only 1.7560, but two-month old descending trend-line, at 1.7650, and the 1.7815-20 also seem important barriers to north for the GBPAUD. If at all the pair manages to surpass the 1.7820 hurdle, the 1.7940, the 1.8000 and the 1.8060 are likely following numbers to watch if holding long positions. Meanwhile, the 1.7365, the 1.7285 and the 1.7200 could trouble the Bears ahead of providing them 1.7000 and the 61.8% FE level of 1.6975 to rejoice.

GBP/CHF

Four-week long downward slanting TL around 1.2620 might try restricting the GBPCHF’s advances, if not then 1.2660 and the 1.2760 could become Bulls’ favorites. Though, the 1.2830-35 horizontal-region can disappoint optimists, failure to do so may divert the pair to 1.2940-50 and the 1.3000 figures. On the downside, the 1.2500 and the 1.2440 should perform their duties as supports, breaking which the 1.2390 and the 1.2375 are expected to come forward as rest-points. During the pair’s additional declines past-1.2375, the 61.8% FE level of 1.2300 might grab limelight.

Asia Surges On Thawing Trade Tension, EU Up But Brexit Concerns In Focus, US Market Cheers Trade News

Asian Markets Surge On Thawing Of Trade Tensions

Indices across Asia surged on signs of thawing trading tensions between the US and China. Where there are still many hurdles to cross three events on Tuesday point to an easing of tensions, de-escalation of threats, and a willingness for the two sides to work toward a lasting agreement.

Topping the list of news is a word that China will lower its tariffs on imports of US cars. The tariffs, currently at 40%, as slated to be lowered to 15% and inline with levees imposed on other global car-exporting nations by China. Along with that, Chinese Vice Premier Liu He says he is actively working with Secretary of the Treasury Steve Mnuchin to resolve disputes that have long plagued China’s trade relations with other global economies.

Huawei CFO Meg Wanzhou was granted bail by a Canadian court on Tuesday alleviating concerns her arrest would bog down trade talks between China and the US. The news helped spur indices higher with gains led by Japan. The Japanese Nikkei posted a gain near 2.25% on strength in automakers. Automakers across the Asian economic region saw gains range from 1.0% (Nissan) to over 6% for Korea’s value-brand Hyundai.

EU Markets Move Higher Although Brexit Concerns Remain In Focus

European bourses were up 1.15% to 1.80% in early trading on Wednesday as thawing trade relations boost global risk appetite. The French CAC was in the lead boosted by strength in autos and basic materials. Shares of stocks like BHP Group, Rio Tinto, and Boliden were leading with gains near 1.75%.

In the UK new developments in the Brexit dealings have traders wary. Yesterday, PM Theresa May canceled a crucial vote of parliament that could have derailed the entire Brexit process. The vote, whether to accept May’s deal or not, was followed by a lightning-fast trip by May seeking concessions from EU lawmakers that may help smooth her way forward. While EU lawmakers are eager to help May no concessions have been given. May now faces a vote of confidence, scheduled for Wednesday evening, that could alter UK leadership and set the Brexit back to square one.

Traders Cheer The Trade News

US markets were up an average 1.0% in early Wednesday pre-opening trading. The move was bolstered by a raft of positive trade news that culminates with a Trump Tweet. In his Tweet Trump says he is upbeat the US and China will reach a trade agreement.

Meanwhile, the US government faces a shutdown. Trump has begun to battle Speaker of the House-apparent Nancy Pelosi over his plans to build a border wall. The two met in a televised conference and clashed over several issues including the wall, the shutdown, and Trump’s surprise inclusion of TV camera’s at the meeting.

Today’s action will be driven by trade news in large part although there are key events on Thursday and Friday for traders to watch out for. Thursday, the ECB is expected to release a policy statement that may sound dovish compared to previous statements while Friday will bring important US retail sales and industrial production data. Today’s CPI data was as expected and helped futures trading edge higher.

GBP/USD Price Forecast – GBP/USD Range Bound Ahead of Key Parliamentary Brexit Vote

GBP/USD opened the new trading week with a bearish gap near 1.2700 handle before seeing a mild recovery through the mid-Asian trading window erasing losses from the gap down opening. The price action of British Pound seems to be pinned at 1.2750 level as UK markets remain cautious in the run-up to the House of Commons vote on Prime Minister Theresa May’s latest Withdrawal Proposal, which is expected to face defeat at the hands of parliament.

The vote on EU approved Brexit deal is to be by British Parliament tomorrow and the current scenario indicates that deal is likely to be voted down as Labor, the Liberal Democrats, the DUP, the SNP and dozens of Conservative MP’s remain solid on their stance against the deal which could lead to a general election leaving the UK in a messy no-deal Brexit scenario.

GBP Could Slide Sharply On Increasing Brexit Woes

Meanwhile, news from UK Times newspaper that 48 letters required to trigger a no-confidence vote on PM May’s government have finally been sent, also increased market fears and weighed on British Pound. However broad-based US Greenback’s weakness helped the pair limit downside move despite bearish influence surrounding GBP.  As of writing this article, GBPUSD pair is trading near flat at 1.2748 up by 0.35% on the day.

On the release front, UK’s calendar is highly active for the day as London market hours will see the release of Q3 GDP, Industrial Production, Manufacturing Production and trade balance data with forecasts hinting at positive GDP data and dovish outcome for industrial and manufacturing production data. Bearish data will influence cable into a highly volatile price action as investors remain twitchy ahead of tomorrow’s Brexit vote.

Meanwhile, US market hours remain relatively silent aside from JOLTs Job Opening data. When looking from a technical perspective, the overall outlook for British Pound continues to remain firmly bearish. The daily chart shows that it broke the daily descendant trend line coming from November high through lateralization, invalidating the relevance of the break.

In the same chart, a bearish 20 SMA has rejected advances while technical indicators resumed their declines within negative ground, keeping the risk skewed to the downside. According to the 4 hours chart, the pair offers a neutral-to-bearish stance, as it closed a few pips below a flat 20 SMA, as technical indicators maintain downward slopes below their midlines. Expected support and resistance for the pair are at 1.2695, 1.2660, 1.2620 and 1.2775, 1.2805, 1.2840 respectively.

The UK’s Tedious Path Toward March 2019

With the UK’s exit from Europe on 29 March 2019 just over 4 months away, uncertainty continues to grow. Just when it appeared that Prime Minister Theresa May had a deal and her cabinet’s approval, ministers began to resign.

It appears the Prime Minister does not have the backing of Parliament and there are mounting calls for her resignation.

Sterling is reacting sharply to developments and after strengthening marginally on news of the cabinet approval, sold off sharply when ministers began to exit.

Bank Assets on the Move

One of the very real implications of Brexit has become clear as a growing list of investment banks have announced plans to move as much as $280 billion in assets from London to Frankfurt. So far Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup are finalizing Brexit plans according to a Bloomberg article published last week.

Deutsche Bank announced in September that it planned to move assets to Frankfurt, with the Financial Times suggesting that it may move several hundred billion USD worths of assets from its London balance sheet to Germany.

In addition, Barclays is set to become Irelands largest bank when it moves ownership of its European branches from the UK to Dublin.

The implications of moving all these assets away from London have yet to be fully digested by the market. The mechanisms involved in moving assets from one entity to another depending on the type of assets and whether they are balance sheet assets or owned by a bank’s clients. In some cases, complex derivatives may be required to transfer risk from one legal owner to another.

Regulators will have to approve some plans, which will have an impact on timing. But, these plans can only be finalized when the details of the UK’s deal with Europe is known, and the current deal seems to be anything but final.

What Are the Consequences?

In the short-term uncertainty is likely to mount over the next few months as banks grapple with logistical and legal issues. In the longer term, the only certainty is that London will have a smaller financial services industry, while Frankfurt and Dublin will see their financial services industries growing.

In terms of practical matters, the next few months may bring growing risk aversion and falling liquidity to European and UK markets. Assets may be tied up by the bureaucratic process of being relocated, and access to collateral will be limited. The result will be volatility, and possibly also an opportunity for traders.

Currencies

The currency pairs that are relevant are obviously the EUR/GBP and GBP/USD.

There is little reason to expect strength from the Pound until there is a lot more certainty. The EUR/GBP pair has traded in a fairly tight range over the last 12 months but remains close to 2017 lows. The GBPUSD may well be targeting 2017’s lows as both Brexit and weak equity markets reinforce the USD’s safe haven status.

GBP/USD Weekly Chart
GBP/USD Weekly Chart

Eventually, the Pound will probably offer a great buying opportunity, but over the next few months, any good news is very likely to follow by the more bad news. Selling Sterling rallies may be a lucrative strategy.

As far as currencies go, with the risk of falling liquidity and rising uncertainty the only winner may well be the USD.

Equities

UK assets are trading at a discount to other markets, but then there a good reason for that. It’s worth remembering that most of the companies in the FTSE 100 are global businesses that earn profits around the world. If the Pound weakens earnings from international operations go up.

The same does not apply to the FTSE 250 which includes more locally focused companies. However, this gives traders two useful tools to trade Brexit related volatility.

Both indices will, of course, be affected by global equity markets which are currently under pressure. If calm returns to global markets the FTSE 100 may offer an opportunity which would be further supported if the GBP weakens. Meanwhile, the FTSE 250 will offer an opportunity if a sense of certainty arrives.

Asia Up Despite Nissan Bombshell, Brexit Hopes Lift UK, Trump Ready To Deal

Asian Markets Buoyed By Easing Trade Tensions

Asian market was mostly higher despite a bombshell allegation against Nissan Chairperson Carlos Ghosn. Ghosn has been accused of violating major Japanese financial laws that may have a material impact on his ability to lead Nissan. The Nissan board issued a statement that Ghosn and another board member had been under-reporting compensation for many years. The news, released after the close of the Asian session, sent shares of Nissan down more than 12%.

In political news, US President Donald Trump may be ready to make a deal with China although results of the APEC meeting are not promising. Jonathan Fenby of TS Lombard said in an interview that Trump is showing signs of a readiness to deal. His hesitancy to lift tariffs to 25% shows caution that may result in positive developments at the G-20 meeting next month. Meanwhile, at the APEC meeting, US and Chinese differences prevented the group from forming an accord for the first time ever.

Brexit Hopes Lift UK, Nissan Drags On Market

EU indices were flat to up at midday as Brexit hopes to provide support and the Nissan news weighs on the indices. On the Brexit front UK Prime Minister, Theresa May is doing her best to ram through whatever kind of deal she can. She says a change of government would only prolong the affair while those within her own government are leaving their posts or criticizing the deal as bad for the UK people.

The UK FTSE 100 led advancing indices at mid-day with a gain new 0.65%. The German DAX and French CAC were both holding flat with gains near 0.0%. The pound was able to gain versus the dollar but the move was small in early Monday trading, only about 0.25% Regardless, the move extends a bounce from the support that began in the previous week and indicates the 1.2700-1.3200 trading range may dominate the GBP/USD in the near-term.

US Market Flat Despite Trade Optimism

The US equity market was indicated to open with a small loss in early Monday pre-opening trading. The SPX was indicated lower by 0.25% while the tech-heavy NASDAQ Composite led with a decline near 0.45%. Shares of Apple are primarily to blame, a report orders of iPhones had been cut led shares of that stock down by 1.0%.

The tech-sector was further weighed down by reports South Korean authorities had massive amounts of evidence three manufacturers including Samsung and Micron were committing antitrust violations. On the earnings front, Agilent and Intuit are expected to report after the bell. A miss from either of those companies could spark further bloodshed in the tech sector.

There was no economic data today but there are some important reads on housing and leading indicators due out later this week. The market will be closed on Thursday, November 22nd, for the Thanksgiving Holiday. Expect to see light trading volume in the US all week.

UK Down On Brexit Woe, Pound Sinks, Asian Up On Brexit Hope, US Dollar Moves Higher

Asian Markets Move Broadly Higher On Brexit Hopes

Asia, led by China, moved broadly higher in Thursday trading, extending a bounce that began earlier in the wee. The Hong Kong-based Heng Seng led advancing indices with a gain of 1.75% followed by a 1.36% gain for the Shang Hai Composite. The Korean Kospi advanced nearly 1.0% on word a draft-Brexit had been written while the Australian ASX and Japanese Nikkei closed closer to break-even. The Japanese Nikkei was Thursday’s laggard posting a loss near -0.20%.

China’s equity markets were also supported by word the Chinese government had sent a written response to Washington’s demands. The details of the letter are not yet known but the sentiment is positive in light of the recently reduced tension between the US and China. Chinese President Xi Jinping and US President Donald Trump are slated to meet at the G-20 Summit in order to discuss improving trade relations.

EU, UK Down On Brexit Resignations

The UK and EU markets were initially higher on easing fear a hard-Brexit was inevitable. Those fears came back to the forefront soon after the open and reduced gains to near 0.25% for the FTSE 100 and Xetra DAX by midmorning. The CAC was the laggard posting mid-morning a loss of -0.20%.

In the UK, tensions over the draft-Brexit have split Theresa May’s parliament resulting in the resignations of several key members including the Brexit Secretary Dominic Raab. Raab says he can not support the current Brexit plan in light of promises made to the British people by ruling party members before the referendum was taken. The Brexit news had a negative impact on the pound. The GBP/USD and EUR/GBP both shed nearly -1.50% on the news.

US Markets Brace For Data, Dollar Moves Higher

The US futures market was indicating a positive open for equity indices in the early hours of the morning. Traders wary of geopolitical events were focused on a raft of economic data that produced a mixed bag of results. After the 8:30 AM data deluge futures pared their gains to indicate an open near break-even.

Retail sales figures came in hotter than expected at 0.80%. This is 0.3% hotter than expected and points to continued strength in the consumer. On the manufacturing front, the Philly Fed’s MBOS fell nearly 10 points to 12.9, far below expectations, on weakness in New Orders. The Empire State Manufacturing Survey counterbalanced MBOS by advancing 2.0 points to 23.3 in evidence of expanding activity in the New York Federal Reserve District.

Earnings reported released before the open on Thursday were good but did not spark a rally in equities. Both WalMart and Cisco reported top and bottom line results that beat the analyst’s consensus and provided a positive outlook. Walmart rallied a little more than 1.0% on the news while Cisco advanced a more robust 4.0%. NVIDIA tops the list of companies reporting earnings after the bell on Thursday. The company is expected to post YOY gains but the result may be negatively impacted by weak sales of cryptocurrency mining chips.

Asia-Pacific Sours On Oil, EU Markets Mixed, Brexit Deal In Sight, US CPI As Expected

Asia-Pacific Equities Sink On Plunging Oil Prices

Asian markets were down nearly across the board as the price for WTI and Brent crude fell to a one-year low. Both global oil benchmarks fell more than -7.0% in Tuesday trading as supply-glut, and downward pressure in prices bent the market to capitulation. The commodity-sensitive Australian ASX led the decline in equities with a loss of -1.75%. Chinese markets moved lower by a tame -0.85% in Shang Hai and -0.54% in Hong Kong.

Chinese markets were buoyed by a mixed bag of economic data. Retail Sales growth in October was a robust 8.6% YOY but missed expectations and raised concern the effects of trade tensions were being felt at the consumer level. Balancing the data was better than expected Industrial Output, 5.9%, and Fixed Investment Spending, 5.7%.

EU Markets Wary Of Brexit Deal

EU markets were moving lower in early trading, but buyers stepped in on word a Brexit deal had been reached. The news is this, negotiators have reached a draft deal that will now be taken for approval by Theresa May’s cabinet. The question now is whether May can get approval from hardliners who’ve been impeding progress.

At midday, EU equities markets were little changed. The FTSE led advancing indices with a gain near 0.25% while the CAC led decliners with a loss less than -0.10%. Market participants, wary of Brexit progress, were also eyeing developments with Italy and its budget. The Italian government has rejected the EU’s request for a new budget proposal and reaffirmed their 2.4% growth target.

US Consumer Level Inflation Hot, But Not Too Hot

The US index futures were slightly lower in early trading but spiked on word consumer-level inflation is contained. The US CPI was reported as up 0.3% from the previous month and up 2.5% YOY. The data shows an acceleration of inflation growth in both the MOM and YOY comparison but only as expected and mitigated by high gas prices. Ex-food & energy CPI rose a more tepid 0.2% MOM and 2.1% YOY, a -0.10% deceleration in YOY inflation from the previous month.

Despite the rise of index prices following the CPI release US equities were not expected to open much higher than Tuesday’s low. The Dow Jones Industrial Average led with an indicated gain near 0.25% while the SPX was not far behind.

Reports trade talks between the US and China had been restarted failed to lift the market, as did earnings. Macy’s, one of the higher profile brick & mortar retailers, reported before the opening bell and blew past EPS estimates. The company reports EPS of $0.27, nearly double consensus, increased comp store sales, and widening margins and yet the stock fell nearly -4.0% in the early pre-market action.

US traders will now turn their attention to earnings reports due out after the bell and a raft of economic reports due out on Thursday. Earnings reports include names like Cisco and Wheaton Precious Metals while Thursday data includes the jobless claims, retail sales, the Philly Fed MBOS, and the Empire State Manufacturing Survey.