Trading from the long side again from the lows
In line with Ryan’s earlier post on the cable , we have to note the EURGBP is still in my preferred Brexit noise range I advocated for in back in September, an update from November here .
I reiterate that it’s my view the negotiation rounds coming up in March will get tougher again as EU and the UK will pick up their peacock fight over the trade framework. In the intermediate calm it was “easier” to be adopt a reconciliation attitude as not a lot was at stake but once money and power will invite themselves to the negotiation table, the EU will get tougher again.
Today’s confirmation the UK will leave the EU custom’s Union on the day of Barnier’s visit to London sets the tone.
So the range then.
We’ve had a couple of outside hours to the downside on the exit bill signature and latest on EU’s seemingly softer Trade deal stance as the market was selling USD in its rotation exercise, taking cable 5% higher.
But these breaks have been rejected and we’re still convincingly in the 0.8735-0.9050 range. I’ve reloaded smalls on Friday around 0.8780, took partial profit around the 100 and 200 DMA’s, both lying at 0.8852/53 today. These MA’s and the break of a small intermediate trend line at 0.8840 will be my markers for the day. Back below, I’ll let the rest go for the day but will be looking to buy the dips again from 0.8812 (20 DMA)and below towards 0.8750/75.
Topside there are equally a few levels to trade/lean on . There’s a resistance trend line coming up at 0.8893 and the next fibs of the Brexit move @ 0.8925. and further north at 0.9000 and 0.9050 . As my idea is still for this range to prevail I will take profit on the 0.9000 approach and as long as there’s light at the end of the Brexit tunnel , which I reckon there will be till the last Brexit breakfast is consumed, I will turn short above.
Trading this range has been fruitful so far and is likely to continue for a while.
The final break out of the range could come rather from deals the UK will strike OUTSIDE the EU than rather the final trade deals it keeps INSIDE… Makes sense ?