No fresh trades today but with Brexit action heating up and the FOMC meeting this week, I’m keeping a close eye on Cable for my potential next move.
Watchlist: GBP/USD Momentum Ahead?
I’m watching Cable this week because I think it has the best potential for some volatility, first with Sterling making moves on Brexit news lately. The latest development is that British lawmakers have instructed Theresa May to try to renegotiate the “backstop,” which was quickly shot down by EU officials not too long after Parliament voted on the amendments to the Brexit deal. Sterling traders didn’t take too kindly to these turn of events, pushing the pound lower into the close of the U.S. trading session. This could be the catalyst for another leg lower for the British pound, but we’ll have to wait and see given the fluidity of the Brexit situation.
For the Greenback, the big question ahead is whether or not the Fed will continue to reduce the balance sheet, given some signs of a slowing global economy or if we’ll still see rate hikes in 2019. We’ll get the answer tomorrow at the FOMC statement, and with such a high degree of uncertainty, the resulting decisions, whatever they may be, will likely be market moving for financial markets all around.
So, volatility should remain high for Cable for the next few sessions, but I think I’ll wait for after the event to make my move.
If the Fed does continue their balance sheet reduction program and/or maintain the probability of rate hikes in 2019, then I’ll watch the area between 1.3050 up to 1.3150 for bearish patterns to take a short position. This especially makes sense if the EU continues to hold onto the idea of not renegotiating the Irish backstop.
What do you think? Is that the only bearish scenario worth considering? What bullish scenarios would you consider? Let me know your thoughts in the comments section down below!
Stay tuned for that and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do. Good luck and good trading!
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