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Clive Lambert - FuturesTechs
Clive Lambert of FuturesTechs explains why he is selling AUDUSD. 0.7455 and 0.7470 are Lambert’s early candidates for a sell order, working a stop above yesterday’s 0.7518 high.
Short term
Trade view / 27 June 2016 at 13:05 GMT

Kicking cable while its down

FX Trade Strategist / www.Loonieviews.net
Canada
Instrument: GBPUSD
Price target:
Market price:
Background

Jumping on a crowded bandwagon is usually a risky venture but in the case of GBPUSD the bandwagon has not yet reached capacity. The UK vote to exit the European Union was a surprise to markets, no doubt about it. The collapse in GBPUSD is the evidence. 

The magnitude of the move is also evidence that the GBPUSD has further to fall. The market is still long GBPUSD. There is simply no way that all the long GBPUSD positions were squared up on Friday and this morning. Many traders, institutions, funds etc. are hoping/praying for a bounce to sell which arguably will limit GBPUSD gains. In addition, the move is too fresh to see much of a turnaround in direction.

Sterling has been crushed before. It might not have lost as much in a single day, but Maggie Thatcher and her economic policies helped drive GBPUSD from 2.4232 on January 5,1981 to 1.0140 by January of 1985.

The UK/EU divorce may become amicable over time but for now, the fine china and cutlery are still flying through the air. There is plenty of room for more GBPUSD weakness.

Management and risk description 

This is an opportunistic trade that has very little technical support due to the magnitude of the GBPUSD decline since Friday. In fact, it is mostly “gut feel” but supported by the initial overwhelmingly negative prospects for the UK economy and the “dog’s breakfast” of the current UK political situation.

The stop will be triggered on any profit-taking rally or new conciliatory talk from the EU.

Parameters

Entry: sell ½ position of GBPUSD call at market (currently 1.3185), balance 1.3235.

Stop: 1.3312.

Target: 1.2975.

Time horizon: five days.

GBPUSD 30-minute with stop-loss noted:
gbpusd
Source: Saxo Bank

USDCAD hourly with post-Brexit levels:
gbpusd Source: Saxo Bank

GBPUSD weekly from 1985 with Fibonacci retracement levels:

gbpusd
Source Saxo Bank

GBPUSD from 1971 (sterling has collapsed before):
gbpusd

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Source: Bloomberg

— Edited by Michael McKenna

For more on forex click here.

Non-independent investment research disclaimer applies. Read more
27 June
fxtime fxtime
Charts are usdcad and commentary is for the cable.....are there two trades?
27 June
fxtime fxtime
Sorry Mike the charts are cable it is the heading that implies they are the usdcad LOL.
27 June
Michael O'Neill Michael O'Neill
Thanks FXtime. Getting it changed now.
27 June
Michael O'Neill Michael O'Neill
BTW: I wasn't very clear with the GBPUSD decline under Maggie Thatcher. It started when she ended exchange controls and a and general rise in the US dollar. So attributing sterlings fall to Maggie Thatchers policies is erroneous. the point was GBPUSD dropped a boat load , albeit in a 4 year period.
27 June
fxtime fxtime
I think the underlying point was correct and the cable was stuffed LOL.
27 June
John Roberti John Roberti
Mike, What is your opinion for the next days on USD cad? The pair is slowly on the upside as it looks it could go still higher to 1,32 or 1,33! What do you think?
27 June
Philidor Philidor
I'm not the violent type, but I've joined in on the kicking on this one. It's a USD eat GBP world.
27 June
Michael O'Neill Michael O'Neill
Apologies for the late reply, John. I Think USDCAD will struggle in the 1.3150-00 zone, especially if oil stays above 45.00/b

However the US dollar is bid against everything. It is tally all about Brexit for now.
28 June
Gennady Gennady
s/l-!
28 June
Gennady Gennady
Unfortunately
28 June
Philidor Philidor
It's still alive, keep kicking!
28 June
Gennady Gennady
Thank you, hold!

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