More Seesaw for Cable?

More Seesaw for Cable?

Chart Of The Day

Sterling continued to seesaw in Asia and early London trade dropping to a low of 1.3360 on disappointment that there was no announcement of a deal yesterday, only to pop back on comments from Philip Hammond that talks were progressing well. Behind the scenes, the key issue is the status of Northern Ireland and the unfettered movement of goods services across all of the Irish isles. PM May appears ready to concede those points to the Irish, but the carve out of these rights could open up pandora’s box of problems for Ms. May as the Scotts and even the city of London -- both hot spots of Remain sentiment may seek the very same privileges. In addition, Ms. May’s junior coalition partners the hard right DUP party could withdraw from the government on any such deal. For now the markets are in a wait and see mode, but volatility in cable is sure to explode on any tangible news one way or the other.

Any positive news could send the GBPUSD pair to fresh yearly highs above 1.3600, but if the deal falls through the decline could take the pair all the way to 1.3000

Cable Double Top?

Cable Double Top?

Chart Of The Day

Cable saw a sharp reversal today after BOE Chief Mark Carney stated that the central bank will likely ignore any budding inflation and will keep the policy accomodative for the foreseeable future.

After several weeks of strong performance, cable is showing clear signs of relative weakness as traders are beginning to become concerned that the UK economy may have peaked. Tomorrow’s UK PMI Services will provide a clear clue as to the state of the UK economy. The market is looking for a small dip lower, but if the drop is more severe the pair could easily give up the 1.2500 figure and may even test 1.2400 if US NFPs print above 200K.

Will 1.2400 Stop Cable?

Will 1.2400 Stop Cable?

Chart Of The Day

After Theresa May’s speech, today cable soared rising nearly four big figures off the lows of the day as it now stands within a few pips of the 1.2400 handle. Part of the run was fueled by the simple “sell the rumor, buy the news” dynamic, but part of the move was also driven by Ms. May’s promise to put the full Brexit to a Parliamentary vote.

However, upon further clarification, this was simply a promise to ratify a deal that will be negotiated well in the future rather than an admission that Parliament should vote on the trigger of Article 50. Still with UK Supreme court still to come chances are good that Ms. May may be forced to get Parliament approval before proceeding with any formal Brexit plans. If the ruling were to come in a few days it could well wipe out the last few shorts at these levels and push the pair into the 1.2500-1.2800 range. But if there is no fresh news for a few days, aside from the smattering of economic data, cable is likely to stall at these levels which represent the biggest resistance since its fall towards 1.2000 on the weekend open.

For now UK data continues to surprise to the upside and remains supportive of cable, but the Brexit woes dominate the trade in the pair and today’s speech offered little solace to pound bulls looking for a measured approach.

Double Bottom for Cable?

Double Bottom for Cable?

Chart Of The Day

The woes of Brexit are well known. UK is in danger of precipitating a “hard” Brexit which would result in its expulsion from the single European market. Yet despite the fears of experts, the economic knock-on effects have yet to materialize. This week the UK economy showed its resilience by posting better than expected data in all three PMI reports. This suggests that UK economy may be stronger than the market thought and that the latest GDP figures could come in at 17-month highs.

Technically the pair has tested the 1.2200 level twice and today’s move back through the 1.2400 figure indicates that the double bottom is in. With 1.2500 now squarely in-view cable may be ready for a short squeeze as late shorts begin to scramble and cover. Topside the pair has no resistance until 1.2700 so there is plenty of scope for upside

Five Things to Learn from the Cable Flash Crash

Boris Schlossberg

What can we learn from the cable flash crash?

  1. That if you really want to move prices -- early Asia is as good a time as any.
  2. That bad news rarely ends when you think it will and buying dips in a downtrend is generally a suckers game.
  3. That human traders will always underestimate how modern day computerized markets will amplify the magnitude and the speed of the move.
  4. That markets always work worst when you need them the most.

But most importantly the main thing that we can learn from from the cable crash is to
always
always
always
attach a stop to every trade.