BREXIT is still rolling along and dominating not just most of screen time but also making a more than hefty contribution to both my $$$ profitability and pips tally this year so far.
As at the close of business for the week on 25thJanuary 2019, my pips total for this year so far was 2,350 pips (Almost 25% of my annual objective) .... happy days.
So, where are we now vis-à-vis BREXIT?
Running down the clock would be my answer. In the last 7 days a lot more focus has been placed on the “CRASH OUT” scenario without a deal being done by March 29th2019 with the UK reverting to WTO rules.
Last week, I watched a SKY news special on the effects of a “CRASH OUT”. The program was transmitted from a small village in the North that was positioned right on the border with a bridge in the village over a river that was the dividing point between Northern Ireland and the Republic of Ireland. It was a fascinating review of the effects that a “CRASH OUT” could bring.
The reality of a “CRASH OUT” are now finally being debated. In essence a “CRASH OUT” results in a hard border. Both the Irish and UK governments have committed themselves to no hard border in line with the peace process “Good Friday” agreement. It should be noted that both the EU and WTO will probably insist on border checks. This would be difficult for both the Irish and UK governments to deal with.
I include below a tweet from last week, where Irish Taoiseach (Prime Minister), Leo Varadkar was speaking on Bloomberg. Now, Bloomberg have picked the words to quote from his interview, but this hardly seems to be language that a country which is a 50% party to the Good Friday agreement should be using in my opinion.
IS THE THERESA MAY MASTERPLAN IN PLAY?
For the last two weeks, I have been focusing on BREXIT with my overview commentaries.
January 19TH: BREXIT...
DEAL OR NO DEAL... GET THE CAN’S READY TO KICK DOWN THE ROAD
January 12TH: BREXIT...
ONCE A REMAINER... ALWAYS A REMAINER
When I wrote my blog on January 12thI finally put down on paper, thoughts that had been plaguing me for some time.
- Theresa May voted to stay in the EU at the 2016 UK referendum.
- On what planet does it make sense for a REMAINER to be in charge of BREXIT?
- In 2018 at the Tory Cabinet meeting at “Chequers” to agree PLAN A, it was fairly obvious that the high profile BREXITEERS in the cabinet like David Davis and Boris Johnson would not be able to agree to PLAN A.
Theresa May knew this. Did she see this as an opportunity to get them out and replace them with more moderate views, in line with her own thoughts and views?
- Dominic Rabb who replaced David Davis as BREXIT Minister resigned as he was minister in name only and was over-ruled by the Prime Minister.
He cited that too much had been conceded and that BREXIT was a very, very soft BREXIT.
- Theresa May assumed complete 100% control of the BREXIT process and she set her RED LINES without any consultation / negotiation / discussions in her own party never mind cross-party.
I can keep going but it all seems like a plan, and the current running down the clock adds to my MASTERPLAN thoughts.
PLAN B, which is to be debated in the House of Commons this coming Tuesday appears more or less the same as PLAN A.
The ERG (European Research Group) led by Jacob Rees-Mogg wants a “CRASH OUT” but without the need for an Irish border. Moving straight to WTO rules. They would take PLAN A without the Irish backstop. However, when push comes to shove, I think a backstop modification would gain support of the ERG and Boris Johnson supporters.
The DUP (Northern Ireland party, Democratic Unionist Party) does not want a border nor does it want the Irish backstop.
The SNP (Scottish Nationalist Party) and Liberal Democrats both want a second referendum. This is on the basis that with a population / voter shift the chances of a REMAIN victory second time around is greater.
The Labour Party wants a General Election, a full-time inclusive Customs Union (I think) and a second referendum. It is unclear exactly.
Basically, the UK parliament are united in what they do NOT want i.e. PLAN A. But they have no idea what they do want instead there is NOT enough support for any way forward.
Theresa May is banking on this hence PLAN B is pretty much the same as PLAN A. It is the only deal on the table. You take PLAN B, or you risk a “CRASH OUT”.
There are many amendments being tabled for next Tuesday’s House of Commons debate. Many are there to stop a “CRASH OUT”, such as extending A50 beyond March 29th, 2019. So, Tuesday will be an interesting day and Theresa May’s PLANS A or B, both offer very soft BREXIT deals, which do NOT have cross parliamentary support.
It is anyone’s guess to predict the outcome.
The markets have decided that UK lawmakers are leaning towards avoiding a “CRASH OUT” and will not RISK a no deal. This is predominantly why the cable has been supported of late and has moved off the AUD & JPY flash crash low of 1.2350 and is now trading above 1.3100. Technically the trading charts look bullish and as long as the cable is above 1.3000 it is hard to argue with any of the technical opinions.
I am long GBP through cross-rates and have 7 live trades and 15 Limit orders stacked ready to go as prices move. I am only trading EUR/GBP, GBP/AUD, GBP/CHF and GBP/NZD. The GBP/JPY and GBP/CAD are not currently on my list and neither is the GBP/USD. I much prefer the EUR/GBP to the GBP/USD as I am also despite last week’s late price action bearish the EUR.
The bottom line is that BREXIT will roll on again next week. It is a political game of “chicken” in the UK and to some extent Brussels. In fairness to Brussels they cannot react until Theresa May gives the EU something to work with, but rhetoric out of Brussels that is negative does NOT help matters. The majority of the House of Commons does NOT trust the EU. This mis-trust runs deep through mainly sovereignty issues.
If you are going to trade the cable or related pairs be careful.
1. FX - FORWARDS, BACKWARDS & SIDEWAYS:
1.1. THIS WEEK’S ECONOMIC DATA:
NOTE: Only the items that interest me are listed here.
1.2. BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
1.3. USD INDEX (DXY) OVERVIEW – MY THOUGHTS:
The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart.
1.4. USD MAJORS - TRADING CHARTS and MY THOUGHTS:
The monthly chart below shows that the EUR/USD remains in a down sloping channel, although we are seeing several attempts to break out higher.
For the past three weeks we have flirted with channel resistance. However, despite many analysts getting very bullish the single currency, recent EUROZONE data has been poor, and I remain bearish the single currency over the longer-term.
I have tried to short and failed. I am now looking for higher levels from which to base my longer-term short trade from. I view this currency pair as a “SELL THE RIPS” pair.
To short around 1.1570 may seem a long way away and it is, but it looks like a great shorting start point in my opinion if we can get there.
Nothing to do here pre-BREXIT.
The big day is this Tuesday with Theresa May’s PLAN B being debated in the House of Commons.
The chart below shows a channel break out and a very, very bullish set up. Whilst I say this one has still to be very careful trading the GBP as reversals can be swift and extremely unforgiving.
A very bullish DAILY ENGULFING CANDLE formed to close last week. In the past few months the vast majority of candle formations and set ups have NOT played out.
We have resistance at 0.7180-90. It looks like this level will break and, on the chart, below I have set out two ranges to consider.
The BLACK rectangle 0.7230 resistance looks like a possible shorting opportunity however, if you think that the ENGULFING CANDLE will really drive higher this week maybe you should be looking at c.0.7300 to short.
On Friday last week with a very weak USD the NZD motored higher.
On the chart below initial resistance and trend line resistance at 0.6840 was tested. My thoughts are that maybe a move back towards 0.6970 could be on the cards once again.
On the WEEKLY CHART (below) there is also a Head and Shoulders formation setting up (potentially) for a substantial reverse move lower targeting 0.6100.
My bias is to short, if I can get a great entry and the Head and Shoulders pattern on a long-term chart that plays out... happy days!
The “loonie” is being driven by OIL at the moment and to say that it is bugging me is an understatement. I want to be short but feel the best opportunity will be from higher levels closer to 1.3500 / 1.3600.
Until these levels are hit, I am just not sure what to do here.
My plan therefore, is to be patient and wait to sell into a RIP higher.
Ultimately this year to keep pace with the FED, the BOC will have to raise interest rates. BOC Governor, Stephen Poloz has stated that interest rate increases will be data dependent. He re-iterated this statement again last week.
All eyes will now be focused on GDP for possible clues.
Not sure what to do with this pair until I am aggressively short the EUR/USD.
I have lost my mojo with this pair, a few years ago I was always in a CHF position whether this pair or the EUR/CHF. At the moment I am long GBP/CHF on the back of being short EUR/GBP, so I am not directly interested in the CHF.
I am waiting but believe this pair will be back towards 1.0500 by the year end.
I want to short this pair. But from where? 110.00 now looks an opportunity but this pair is NOT reacting well to its correlations, whether it be the S&P, Bonds, Gold or China. I am just NOT sure.
Hopefully, I will see the light this week after the FED statement.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
2.1. WEEKLY FX PREMIUM PERFORMANCE:
January 2019 so far: +2,350 net profitable pips
2019 year to date: +2,350 net profitable pips.
The WEEKLY FX PREMIUM is my subscribed based FX support option, which offers, subscribers’ full access to my suggested trade set-ups and my market commentaries.
If you go to my website you will see more information about the WEEKLY FX PREMIUM, including the “SUBSCRIBE” tab at the top of my welcome page.
2.2. SOME OF THE BENEFITS OF SUBSCRIBING:
2.3. WEEKLY FX PREMIUM – TRADING PROJECTION 2019:
2.4. WEEKLY FX PREMIUM SUBSCRIPTION COSTS:
SILVER: 3 months (10 weeks) = CAD350.00
GOLD: 6 months (20 weeks) = CAD$600.00
PLATINUM: 12 months (40 weeks) = CAD$900.00
(Platinum renewal = CAD$750.00)
Go to my website www.weeklyfxdrivethru.comfor more details of all the subscription options under the “SUBSCRIBE TAB.
To subscribe to the WEEKLY FX PREMIUM, you will require a valid credit card.
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
4. CLOSING THOUGHTS:
Nothing more to add here, I have said enough except,
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
The Pip Accumulator
BLOG VERSION: #309 FREE NEWSLETTER
DATE: 27th January 2019