Free Profitable Forex Newsletter
Hey! This is Philip with this week's Forex update of the Free Profitable Forex Newsletter!
Before we get into GBP and the Bank of Engalnd, let's briefly revisit the EURAUD trade sent last week.
Update on the EURAUD trade sent last week
EURAUD met the conditions that we described in last week’s newsletter, but the position got stopped out at breakeven after initially moving into profit. Essentially, the 1.6650 resistance zone held and rejected the move higher. Now, we are waiting for another bullish push to validate a second entry. That could happen around the current
levels near 1.63, or EURAUD may instead break lower, in which case, the pair will reach new lows for the cycle. In such a scenario, the next buying opportunity would likely exist at levels below 1.58, around the support trendline
Keeping an eye on AUDUSD is also essential for how EURAUD develops. A good confirmation for a bottom in EURAUD will be if AUDUSD breaks the support trendline of the rising channel. In this case, a steep bearish trend may start on AUDUSD, which is
rather typical for the pair once such orderly channels are broken.
A relatively stable EURUSD, coupled with a falling AUDUSD, should provide support for EURAUD.
GBP with high two-way volatility risks; A bearish breakdown more likely
Pound sterling is the currency to watch at the moment. As suggested in our weekly analysis, there are high-risk events over the next two weeks that could ignite wild price swings across GBP pairs.
Most importantly, the future of Brexit remains uncertain, and headlines will be coming out as we go into the June 30 final date for extending the December 31 exit deadline. If the two sides don’t agree on an extension, then GBP will likely sell off sharply on the increased risks for a disruptive
“hard Brexit” on December 31, 2020.
In the immediate near-term, the BOE meeting tomorrow is the huge event. Consensus forecasts estimate the British central bank will expand QE purchases by around £100 billion. But, if the MPC decides to go with a more dovish policy action than this, by
either expanding QE by more than £100 billion, or moving a step closer to adopting negative interest rates, it would likely send GBP falling.
So, the cards seem to be aligned against GBP going into the month-end. The most negative GBP scenario would be that of an ultra-dovish BOE coupled with a negative Brexit outcome (e.g., the EU and UK saying there will be no deal). While it’s
more likely that the two sides will say they will try to strike a deal in the remaining 6 months, GBP would still be pressured in this scenario because uncertainty about the final Brexit outcome remains high. The BOE meeting tomorrow could be the event to trigger a technical breakdown in GBPUSD that could then extend further lower.
Below we show the technical situation of GBPUSD. The key support now is 1.25 ahead going into the BOE and GBPUSD can sink to 1.20 again in the most bearish scenario.
Trade signals from the past week
- June 15 - Long EURAUD from 1.6450; stop triggered at breakeven after the initial move in profit = 0 pips (trade idea sent June 11)
TOTAL: 0 pips in the past week
TOTAL: +2725 pips profit since October 1, 2018
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Thank you!
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Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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