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Ukreferendum

FTSE100 - POSSIBLE INVERSE HEAD AND SHOULDER PATTERN WEEKLYToday, Bank of England governor Mark Carney said a rate cut is needed after the Brexit vote and hinted that it could come as soon as this summer! This news got the FTSE and the DAX flying up to nearly 300 points. Also, the Feds stated this week that they may cut rates this summer as well, possibly even this month (July) so that is really great news for global indices. However, with the political uncertainty in Europe and UK, it wont be a sure bet! I believe the UK and European stocks will suffer later this year due to Brexit after shocks. I still expect more downside for FTSE100 and pound in particular but after today's news I think the markets will rally up first, ftse back near its all time high around 7100. On the Weekly chart, I have identified a possible inverse head and shoulder pattern that has already broken the neckline today. We have the 200 MA support around 6460 and also our neckline support around 6400. In this case, our entry would be around 6460-6500 with stop loss below 6370 with a potential target of 7100.
FX:UK100
by Sagefx
1
GBPUSD: THE RUN DOWN & HOW TO TRADE - FOMC & UK EU REFERENDUM 2I suggest you check out ALL of the relevant articles that i attach to this post so that this post makes sense SEE PART 1 ALSO GBPUSD historical Price Action The findings of previous the attached "Price action history posts" led to the conclusion that referendum history clearly wasn't repeating itself however IMO because this is the case it has opened up massive opportunities - for example; - Price Action for the SUR sold off a massive 1000pips 8 weeks before the vote, then recovered 400pips 2wks leading into the vote in 2014 - such price action didnt present much trading opportunity since the risks were priced so early, many retail investors missed the big move and probably made heavy losses by shorting in the 2wks into the event when the market actually rose. - HOWEVER, the market for the UER has been trading sideways/ directionless (with a slight upwards bias) for over 16wks only gaining from 1.41-1.45, with many candles failing to hold onto their extreme high/lows - simply open-close at median levels which further confirms the lack of conviction; this has meant that GU now trades considerably ABOVE lows at 1.38 which means there is clear room for a down trend to emerge and thus we can be confident/ safe in taking SHORTS on the pair at levels signif above the 1.38, as we can assume that the market will seek out the recent 1.38 lows if a downtrend does emerge - theres a clear and nearby target for a downtrend. Fundamentals and Summary - FOMC has started its hike cycle, GU is extremely sensitive to US rates and shed well over 1000pips in the run up and after the December FOMC meeting (compared to the EURO who still trades above hike levels). Thus we can assume that future rate increases, or the speculation that they will increase, will continue to price GU lower. The UK BOE isnt likely to raise Rates until late 2017/2018 as our economy (CPI 0.3% vs US 1.1%/ Core 1.2% vs US 2.1%), thus this Monetary Policy divergence theme is likely to continue for sometime, consequently devaluing GBP consistently lower and lower in the future, as it has done before, which gives me confidence in this part of the trade. Furthermore, in the short term the UK EU Referendum will serve as uncertainty that will undoubtably drive GU down in the near term - regardless of the result as the uncertainty WILL drive rational investors from holding sterling. - I like being short sterling over the short and long term as the CB Policy divergence, imo, will serve as a consistent underlying seller of GBP over the next 1/2 years whilst the UK EU Ref provides us near term downside pressure. ALSO, being short sterling into the Ref and into future FOMC meetings means you benefit from the carry of the "event tail risks" e.g. you are positively exposed to any probabilisticly unlikely, but possible, events - which would be extremely profitable e.g. if UK vote to leave EU you have downside already placed on GBP or if FOMC steepen the hiking curve we are positioned to benefit. - As discussed earlier, over the weekend i thought using CHF or JPY to combine with short GBP or EUR may be effective as 1. CHF and JPY both havent priced lower as heavily as USD (relatively more downside value available). 2. By being long CHF/JPY on the basis of being short GBP because of Brexit risks, you are able to hold the risk-off assets which make the trade 2-way e.g. you collect the GBP Brexit uncertainty selling AND the JPY/CHF buying as investors flee to safety - such 2-way trades create exponentially more downside momentum since you have TWO drivers. TRADING STRATEGY: SELL/ FADE ANY PULL BACKS IN A PYRAMID e.g. 3@1.450, 2@1.445 & 1@1.44! SL: 1.48 - holding until June 23/24th, or 27th of July for all 2 X FOMC and the BREXIT REF event volatility carry TP: Fed hike = <1.38; Fed Hawk = 1.40; Brexit uncertainty = <1.40; Brexit YES = < 1.345. Brexit & Hike = <1.30
Short
by QuantumLogicTrading
4
BUY USDJPY: SUP LEVEL @105.5 & VOLATILITY SELL-OFF @ HIGH LEVELSBUY USDJPY @106.5 or @107.0 - SL @105 - TP @109-11 based on: $YEN's historical most important support level - The 105.5 Key level will more than likely hold as it has many times before - At 105.5 there are 3 significant UNSUCCESSFUL tests of the level over the last 3 years thus it is a great entry point. Also another plus is if you look at the monthly chart you will notice 105.5 is the 2nd most important level in $Yen's 20y+ history, the 1st most important/tested is the 101 level. - Further, over the last 3 years the level has been tested 4 times in total and it only broke once when USDJPY rose to 127 so that means LONG at this level has a 75% chance of success (based on the simple discrete math). - Plus, around 105.5 at 106 and 106.5 these also provide "mini" strong support levels which i think are great, low risk entry points for long positions. Normal Distribution and High Price Standard Deviation Volatility - as you can see the weekly bar has closed below the 5 year -3SD (and -2SD 2.5year) once before, by the red bar 5 weeks ago which was also at the 105.5 support level- at which point USDJPY0.02% rallied back up to 111.5 from 105.5 after closing below the -3SD and -2SD line and on the 105.5 so we could see topside like this again. - in addition to this, it is worth noting that the 5y -3SD blue line that was violated but rejected 5 weeks ago and is being tested again, based on normal distribution theory, says that prices touching this line have a 99.5% probability of reverting BACK UP towards the mean at 122.5. The -2SD 2.5year line that was also violated has a 95% probability of retracing up towards the mean at 126. Historical and implied volatility at all time highs - a reversal - Historical volatility across the board (5,10,20,30,60) is trading at all time high levels now and at some point these levels have to come down, investors cant keep pushing vols higher, which in turn, means selling of UJ must come to an end soon and we should see an upward recovery run. - The same is true about Implied vols which are trading at 15.75% which is in the (upper) 90th percentile of the last 2.5 years of days, meaning implied vols 90% of the time have been lower than this - thus a reversal is more likely at these levels. HV is likely in the 90%tile or greater also - Usually a sell-off in volatility precedes buying of UJ. - See more info on vols here: www.tradingfloor.com Downside analysis 1. The obvious risk of the Long UJ play are that the 105.5 level doesn't hold, in which case i believe the long squeeze caused, as a result of all long SLs being hit causing a cascade of selling could take us down to 102/3 - however this is easily avoided by keeping tight stops at 104.5-`105 dependent on your risk appetite. - even with a 150pip SL it still returns us 3x returns with a TP target of 111+ 2. The markets may trade risk off in the coming weeks as the macroeconomic envrionment is filled with uncertainty e.g. FOMC, BOJ and UK EU Referendum, in which these events are compounded by the fact that risk markets (spx etc) are currently trading at all time highs, making a reversal in their direction and risk-off tone more likely. Furthermore other risk-off assets such as Gold and Bonds are trading well. All of which may combine into a strong risk off environment that fuels the JPY follow the bullish trend with its counterparts (bonds and gold) and enabling UJ to push past the 105 strong hold. - However, these issues are all displaced by a tight SL as advised at 104.9 (to benefit from the 105 key lvl supporrt potential)
Long
by QuantumLogicTrading
4
PRICE ACTION ANALYSIS - GBPUSD: SCOTTISH UK VS UK EU REFERENDUMThis article compares the price and technical analysis of GBPUSD in the 10-weeks leading into the two events in order to gain an execution-able advantage going into the UK EU Referendum taking place on the 23rd June 2016. Price Action and Trends Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - The first 8 of the 10 weeks GU traded extremely bid, selling off 1000pips from 1.7000 to 1.6000 . GU failed to make any significant recoveries during this period - signifying an extremely strong down-trend. - at the end of the down trend and coming into the REF, GU recovered 40% from 1.6000 on the 9th Sep, to 1.64000 on the 18th Sep (event vol highs at 1.6580). The sell off the proceeded to continue after the event, selling off back to 1.5900 by week 12/13. - Price action remained significantly below the 50 & 20 VWMA throughout the 10-week period and after the event - confirming the strong down-trend. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - Since the bottom formed on 29th Feb at 1.3850, GU has been trading in an up trend, forming marginally higher highs and higher lows. However, the uptrend has turned into sideways action in the last 3-4 weeks as GU has failed to make new highs of any significance and is failing to make higher lows - and the high-low range is tightening. in the last 10 weeks GU has risen 330 pips from 1.4270 to 1.4500 close-close and has had a range of 600 pips - 1.4170 to 1.4770. In the last 5 Weeks however GU traded flat closed to close at 1.4500, with a range of 400pips 1.4340 to 1.4730 illustrating the tightening range, sideways movement and end to the trend - the market is sleeping and is waiting for a stimulus to break in a direction. - At the start of the 10 week period, Price bullishly crossed the 50 & 20 VWMA and has stayed above since, confirming an up trend. The 20 period, however, has been trading choppy, illustrating the low trend/ direction and the significant pull-backs. Comparisons 1. The Scot REF priced GU over 1000 pips lower in the 10 week period, in a decisive downward move - however, this UK EU event has failed to do anything similar and has actually done the opposite by rising in the last 10 weeks, currently trading up 300 pips. - Why? imo there is only 2 reasons why there has been such a big difference in the price action. 1. The reason GU isnt pricing downward is because GU already priced/ factored in Brexit uncertainty into the downside we saw between december 18th.15 to March 2nd.16, which took us from 1.5300 to 1.3800 which is a whopping 1500+pips lower - this was likely FOMC hike driven but given the extent of the move, it is highly likely that brexit was included in the price lower - hence why we are not seeing a move now - the UK REF is already in the price. 2. The less likely reason is that GU isnt pricing the move because 1). the market has been scared stiff by the uncertainty, and people simple arent willing to take risk either way thus explaining why price is trading flat/sideways. or 2) GU is planning on making a significant run to the downside in the next two weeks where it could shed 1000 pips if it falls back to 1.3800; or even 700 pips if it moves to 1.4000 which isnt that far off of the 1000pip Scot Ref move. The technical indicators are just mirror a function of price thus I will not read into the technicals much - obviously the Scot Ref indicators spent much of the time depressed since the price was falling rapidly, whilst the UK EU Ref has been mixed - since the price is trading sideways. *Look out for my upcoming article where i will discus what the above differences mean and what they imply price action will do in the next two weeks going into the UK EU Ref and FOMC.
by QuantumLogicTrading
PRICE ACTION ANALYSIS - GBPUSD: SCOTTISH UK V UK EU REFERENDUM 2This article compares the price and technical analysis of GBPUSD in the 10-weeks leading into the two events in order to gain an execution-able advantage going into the UK EU Referendum taking place on the 23rd June 2016. Ranges Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - GU started the period at 1.7000 and closed the period at 1.64000, with highs at 1.7150 and lows at 1.6000 with a range of 1150pips. - In the last 5 weeks (Aug.18th-Sep 18th) GU opened at 1.6730, closed at 1.6400 with highs at 1.6730 and lows at 1.6000 and a range of 730 pips - Close to open of 330pips - In the last 5 weeks (Aug.1st-Sep5th 5wk comparison) GU opened at 1.6877, closed at 1.6300 with highs at 1.6877 and lows at 1.6277 and a range of 600pips. - from week 10-13 GU shed the the Recovery/ No vote volatility gains, and traded from 1.6400 to 1.5900 with a range of 500 pips. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - GU started the period at 1.4270 and closed at 1.4500 - range of 600 pips - 1.4170 to 1.4770. -In the last 5 Weeks (5wk comparison) however GU traded flat open to close at 1.4500-10, but with a range of 400pips 1.4340 to 1.4730. Comparisons In general, the Scot Ref traded/closed much closer to its ranges than the UK EU Ref has to date e.g. in the "comparative" last 5wks, Scot Ref opened at 1.6877 (which was its high also) and closed at 1.6300 (only 30 pips from its range low at 1.6270) so GU ate 570/600pips of its range - illustrating that the Scot Ref had much more directional bias since it traded and held its extreme levels. Where as the UK EU Ref comparative 5wk period, opened at 1.4500 and closed at 1.4510, but with a range of 1.4340 to 1.4730, so GU only managed to eat/commit to 10/400pips that it ranged - illustrating that the UK EU Ref has lot direction commitment and 0 trend, it is a sideways ranging market. Technicals Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - RSI, STOCH and RVI sold off in the first weeks of the 10wk period, then remained severly under pressure for the remainder of the 8wk sell off - all of which failing to break 40 and posting lows of 13 with several <20s. The event driven recovery between the 9th sep to 18th sep however helped the technicals recover to 50 levels. - Historical vol, traded in an uptrend during the first 8wk selloff from 2 to 11, before falling slightly during the recovery and spiking again to 10-12 around the REF date due to event volatility. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - RSI and RVI have been bullish, trading in the upper 60% all of the time, with several "overbrought" conditions arising at 70. - Historical vol has traded relatively flat, ranging between 6-12 with it ticking up in recent times to trade above 10 on most days now. - Stoch oscillated throughout the period, with a bias to the downside, showing two oversold conditions of <20, illustrating the bullish trend as it was the little pullbacks that caused these conditions. * See the first article in this series (linked to this article) *Look out for my upcoming article where i will discus what the above differences mean and what they imply price action will do in the next two weeks going into the UK EU Ref and FOMC .
by QuantumLogicTrading
5
PRICE ACTION ANALYSIS - GBPUSD: SCOTTISH UK VS UK EU REFERENDUMThis article compares the price and technical analysis of GBPUSD-0.27% in the 10-weeks leading into the two events in order to gain an execution-able advantage going into the UK EU Referendum taking place on the 23rd June 2016. Ranges Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - GU started the period at 1.7000 and closed the period at 1.64000, with highs at 1.7150 and lows at 1.6000 with a range of 1150pips. - In the last 5 weeks (Aug.18th-Sep 18th) GU opened at 1.6730, closed at 1.6400 with highs at 1.6730 and lows at 1.6000 and a range of 730 pips - Close to open of 330pips - In the last 5 weeks (Aug.1st-Sep5th 5wk comparison) GU opened at 1.6877, closed at 1.6300 with highs at 1.6877 and lows at 1.6277 and a range of 600pips. - from week 10-13 GU shed the the Recovery/ No vote volatility gains, and traded from 1.6400 to 1.5900 with a range of 500 pips. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - GU started the period at 1.4270 and closed at 1.4500 - range of 600 pips - 1.4170 to 1.4770. -In the last 5 Weeks (5wk comparison) however GU traded flat open to close at 1.4500-10, but with a range of 400pips 1.4340 to 1.4730. Comparisons In general, the Scot Ref traded/closed much closer to its ranges than the UK EU Ref has to date e.g. in the "comparative" last 5wks, Scot Ref opened at 1.6877 (which was its high also) and closed at 1.6300 (only 30 pips from its range low at 1.6270) so GU ate 570/600pips of its range - illustrating that the Scot Ref had much more directional bias since it traded and held its extreme levels. Where as the UK EU Ref comparative 5wk period, opened at 1.4500 and closed at 1.4510, but with a range of 1.4340 to 1.4730, so GU only managed to eat/commit to 10/400pips that it ranged - illustrating that the UK EU Ref has lot direction commitment and 0 trend, it is a sideways ranging market. Technicals Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 RSI, STOCH and RVI sold off in the first weeks of the 10wk period, then remained severly under pressure for the remainder of the 8wk sell off - all of w hich failing to break 40 and posting lows of 13 with several <20s. The event driven recovery between the 9th sep to 18th sep however helped the technicals recover to 50 levels. Historical vol, traded in an uptrend during the first 8wk selloff from 2 to 11, before falling slightly during the recovery and spiking again to 10-12 around the REF date due to event volatility. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 RSI and RVI have been bullish, trading in the upper 60% all of the time, with several "overbrought" conditions arising at 70. Historical vol has traded relatively flat, ranging between 6-12 with it ticking up in recent times to trade above 10 on most days now. Stoch oscillated throughout the period, with a bias to the downside, showing two oversold conditions of <20, illustrating the bullish trend as it was the little pullbacks that caused these conditions. *Look out for my upcoming article where i will discus what the above differences mean and what they imply price action will do in the next two weeks going into the UK EU Ref and FOMC .
by QuantumLogicTrading
TRADING CORRELATION PT 2- GBPUSD: SHORT CABLE ON NEG EUR$ CORR XOn the 1D time frame, a strong positive correlation relationship emerges - where previously on the 4h time-frame the correlation looked relationship-less and "noisy". However, looking back at the Daily correlation over the last 2-3 years for GU and EU one noticeable and significant trend emerges - A steep fall in correlation, either from positive-lower positive, or positive to negative, is historically ALWAYS followed shortly by a plummet/ Sell-off in GBP$. Thus as we see below GU v EU correlation has been descending and has just turned negative - so in my opinion we should consider selling GU as if history holds true an aggressive sell off on the daily is close by . *please see next article where i confirm this trend by looking at the Daily zoomed out*
Short
by QuantumLogicTrading
1
GBPUSD: SELL/FADE CABLE ALGO SPIKE @ >1.45Unknown quantity just repriced GBPUSD right into my sell limit zone of 1.45-1.465 (see attached article). Im recommending getting on the cheap risk NOW as FOMC and BREXIT REF can only price GU lower in the coming days/weeks - get it now whilst its cheap! IMO there are 2 things it could have been 1. Algo/ flash buying 2. Some asia-lead Brexit poll that came back "no leave. Either way both dont have much grounding. HOWEVER whatever it was MAY set us up for more GU buying today at some point so make sure you have more SELL LIMITS to take advantage of any further upside volatility that you can get some downside GBP risk cheaply! SELL LIMITS @ 1.455, 1.460, 1.465, 1.469
Short
by QuantumLogicTrading
2
TRADING CORRELATION PT 1- EURUSD: SELL EUR$ ON DXY MOVES HIGHER This 2-part article will look at the practical application of correlations in trading and show how to use correlation inferences to exploit the statistical advantages they offer. On the 4h time frame, the highest day-tradable timeframe imo we see EUR$ has an exclusively negative and almost 1for1 correlation with the dollar index (or dollar "market"), however, despite popular belief EU actually has a mixed and weak correlation with GU (as we see the EU v GU correlation move from positive to negative several times). This relationship is backed up by EU price action currently trading at +2sd of the mean, whilst GU performs the stark opposite at -2sd of the mean. We can use this information in 2 ways to trade the 4h time frame - please bear in mind this is the 4h timeframe only, corrs differ using different time-frames. 1. We know that EU and GU dont hold any confident correlation thus we SHOULDNT make trades based for EU based on GU - despite many people often trading EU based on GU moves. 2. Instead, we know 4h EU is highly correlated with the $ Market, thus we CAN make trades based on $ Index moves - so personally, i will wait for the $index to move/break higher, at which point i will then SHORT EU, since they have a 90%+ negative correlation relationship which is rising atm. - This imo gives us a perfect entry signal, once $ Index moves up we can then short the overweight EU which is trading at highly volatile levels above its average. I also like short EU fundamentally for: FOMC hawkish or hike on the 16th - must push eur$ lower BREXIT 23rd june - UK Referendum imo has NOT yet been priced at all in downside euro's yet (especially compared to GU, this is the main driver for the increase in negative corrs between the two pairs currently) ECB poor econ management - Eurozone is STILL suffering with below 0% inflation and 10%+ unemployment, i think this trend will continue throughout the year and ECB will have to do more printing/ issue more EURO supply side, thus moving EU down - especially if the FOMC hikes and the Monetary policy diverges more. I will shortly release a follow up article, looking at a higher time-frame to illustrate the different tradable inferences we can make.
Short
by QuantumLogicTrading
2
GBPUSD OPEN - 100 PIPS LOWER; UNDERPRICED RISK = SELL PULL BACKSA disappointing open from cable with a bears perspective. Gapping down 100 pips to 1.435 almost immediately puts my sell limit orders (at 146.5) in "unlikely" territory of being hit this week. On friday following the $ EMP report cable managed to rally to 1.458 - i was hopeful it would tick a few more pips upward before the slew of selling started as we move further into FOMC and Brexit event Uncertainty territory. Reason being, i was looking for better/ safer levels to short at - cable at 1.465 is an almost CERTAIN trade (the ones i like) as the next daily support level isnt until 1.443 which means there was over 200 pips of 0 risk equity upside to be collected. Since we are already trading well below last weeks lows at 1.436, we will likely soon test the daily support level at 1.433 then 1.430. TRADING STRATEGY: SELL/ FADE ANY PULL BACKS IN A PYRAMID e.g. 1@1.450, 2@1.456 & 3@1.464! TPSL is discretionary.. i personally have my stops just above 1.48 (on my current shorts at 1.45as I will be holding until the 23/24th of june (to include the FOMC and BREXIT REF volatility) which at somepoint IMO will yield at least TP1.5x the amount of SL = 250/300pips. FOMC hike = 1.38 or 700pips; FOMC Hawkish = 1.41 or 400 pips; BREXIT uncertainty = 1.40-1 or 400-500pips; BREXIT YES = < 1.345. Thus the risks from 1.45 are certainly skewed to the downside for cable (upside for shorts) in my opinion. Above is my strategy for this week, given it is the last realistic week we will be able to add "risk-cheap" shorts to our portfolios (given FOMC is on the 16th and brexit ref on the 23rd). BUT given we have already started the week lower, I think the market has finally begun to price in the cheap risk hence the 100 pips lower - you will see in my previous articles i said to short cable anything below 1.45 - which is now 150pips of upside and looking good for more!
Short
by QuantumLogicTrading