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Cable Update (GBPUSD)

  • #563,801
  • Edited 1:43am Dec 5, 2020 1:06am | Edited 1:43am
Lots of TV/online news coverage last night in Uk re the 'pausing' of brexit trade deal talks 'to refer to principles.' The move down from y/day's and the weekly hi of 3539 had already begun but was given an extra kick by this announcement seeing a pullback lo of 3419 and a close (on my broker) of 3436bid, against y/day's lo of 3410, so not a total capitulation, (so far.) It all depends on updates/reports/rumours over the w/e as to what market will do with it on Sun/Mon open.

The last 10 trading days or so has seen gbpusd and other related markets react to the said updates/reports and rumours as the 'mood music' has swayed from cautiously optimistic to pessimistic about the chances of a deal. Friday started the day as the former leading to the 2nd break higher from the previous 4hr range, after the pullback from 3499 - price finding support at the top of that range to move north again - clearing the longer term prev sw hi's @ 3482 and 3514 before the pullback to y/day's 3419 p/back lo.

Whilst the chances have taken a definite turn for the worse, nothing is decided yet, we simply do not yet know for certain whether there will be some kind of a deal or not. (There are also other fundie themes at play and I refer particularly to the developing one which is the potential U.s multi $tr stimulus/covid support package which will likely have an effect on the $ side of the gbpusd equation.)

Longer term bears nursing floating losses will have been given a 'shot in the arm' (if you'll pardon the rather prescient pun,) by the announcement, but a lot can happen between now and market open. Johnson is reportedly due to speak to Von Der Layen / Macron, probably Merkel (may as well whilst he has his address book open at 'M,') etc today, so we'll see what this brings. Of course if this is all just brinksmanship/posturing/theatrics and/or this ' little englander ' right wing govt in the uk really had no intention of securing what they sold to the public on leaving the Eu as an 'oven ready' deal anyway, then we will likely see a quick collapse of the talks.

We know the most probable market reactions to each outcome scenario so let's see which one actually comes about, and whether the most probable market reaction to the actual outcome plays out. Whatever happens, always trade what you see-not what you think, and be guided by price.

[I'm actually only gonna trade Monday as have got a good deal for some early winter sun so will be back trading after that on Mon 17th Dec for a few days before the xmas/new year break.]

Technically:

Briefly, Mthly remains rangy with recent strength off 2 x HL's and an upside break of the multi year desc t/line, (the effective top of the falling wedge on that t/f,) and resistance. (Last mthly HL is @ 2675.) Wkly/Dly remain in general fractal uptrends. Weekly candle closed bullishly but the Dly closed as a dragonfly doji/pinbar. (Last Wkly HL is @ 2854, last Dly HL is @ 3288.) 4hr resumed it's general fractal uptrend after last week's rangy conditions but the last printed candle was bearish. (Last 4hr HL is @ 3410.)

99% of the 13week awr travelled this trading week just closed, and 44% of 3mth amr so far this month.

The closing state of the 20/50/100 ema crosses across the t/f's was as below.
Attached Image
Trader with an Edge.
  • #563,802
  • Dec 5, 2020 1:15am Dec 5, 2020 1:15am
Quoting YvonneVon
Conclusion..... Fundamentally, we have potential news of GBP downside, but news that are not that detrimental. We also have potential news of USD downside. .......

I think you vastly underestimate the potential for Gbpusd downside. Re potential U.s stimulus - what's another couple of trillion $ on top of an already unrepayable $27trillion national debt ?
Trader with an Edge.
  • #563,803
  • Dec 5, 2020 1:54am Dec 5, 2020 1:54am
Quoting YvonneVon
Technical analysis. Bears are excited over a drop from 1.3539 to 1.3446 (close) but they have not realized the price we closed at last Friday. Look at how many pips we have gained over the week-does anyone expect Cable to keep surging and surging non-stop? This is what has happened over the week: Bulls: Mmmmmm, I am so comfortable sitting above 1.34, a previous resistance and have breached 1.35. Bears: Hahahahaha, it dropped below 1.35, hahahahahaa. Whose conversation makes more sense? Bulls have broken 1.34 resistance and consistently closed above...
This is a very good analysis, but on fundamental side, I can't agree with you. Stimulus is important, but mostly priced in. I think that even larger stimulus is priced in as market expects Biden to spend a lot when he gets into the White House. No deal is not priced in, analysts at Goldman Sachs and other investment banks predicted 20% chance of no deal at most. But talks are stopped, and a path to a deal does not seem to exist at the moment. Will the leaders find it? Possible, but very difficult given the promises they gave internally. So higher probability of no deal will have to be reflected in the price. And the consequences of no deal are catastrophic, market may or may not realise it now, but when it does, a panic would set in.
  • #563,804
  • Dec 5, 2020 3:49am Dec 5, 2020 3:49am
December range so far High 1.3539 - Low 1.3286 = 253 pips range.

Most repeated December Range is usually between 350 - 500 pips. This means at least 100 - 250 more pips to break either levels.

Now previous yearly top at 1.3480 convincingly broken to 1.3539 usually comes with reversal of 130 - 200 pips before trend continuation.

Most times when a resistance gets broken, it usually breaks by at least 200 more pips which means 1.3480 plus 200 = 1.3680.

Now failure to break below 1.3340 is certain invitation of 1.3680 in the immediate term.

Also noteworthy that 1.3286 being held constant means the current high of 1.3539 is seen as temporary.

1.3286 + 400 pips = 1.3686 ( if current low is untested)
1.3539 - 400 pips = 1.3139 ( if current high is untested)

Bears need to be fully ready to accept 1.3680 area as very likely to occur but not in any way an advice to go long. Ensure equity is strong enough to tolerate spike to 1.3680 area then a fat sell order can be applied at 1.3680 area to target 1.3180 area

Scenario 2 is place a buy limit at 1.3360 area with tight stop of 1.33200 then target of 1.3680.

Summary
Buy limit at 1.3360 ... Stop at 1.3320 ... Target 1.3680
Sell limit at 1.3660 ... With no stop ... Target 1.3180

As for me, I have sell trades already in place at 1.3376 and 1.3475 with targets at 1.3180. I will exit the sell of 1.3475 at 1.3375 area and leave one sell open, the potential sell that will be exited at 1.3375 area will be replaced at 1.3660 area if or when price gets there to target 1.3180.

Brexit deal announcement can make spike to 1.3680 but no deal will invalidate 1.3680 and make price fall Aggressively to 1.3180 area.

Trade with money management and be in control of your emotions.

Trade safe to always trade another day.
Data + Stat + Risk/Emotions Management
  • #563,805
  • Dec 5, 2020 4:21am Dec 5, 2020 4:21am
Quoting Catempire
Good weekend guys {image}
ble.... so rude....
  • #563,806
  • Dec 5, 2020 5:51am Dec 5, 2020 5:51am
Quoting Catempire
Just chatting to someone on Twitter. A brexiteer, clearly. Him “but we can just sell our produce to other countries” Me “where is this market suddenly going to appear from that wants British carrots & fish, or parts for aeroplanes that are made in Europe? a country crying out for all our goods? Have you ever considered the logistics of trading with USA over Europe? How those excess costs make readily available products (already in their country) none viable? Clearly not” That is why the question should never have been put to the people, the people...
You seem to be forgetting that the UK has vast global interest, it doesn't have to rely on a black pudding industry.
  • #563,807
  • Dec 5, 2020 5:53am Dec 5, 2020 5:53am
Quoting Nala66
{quote} You seem to be forgetting that the UK has vast global interest, it doesn't have to rely on a black pudding industry.
I don’t forget that at all.

Europe still makes up 54% of the U.K. exports.... markets for those goods don’t just appear out of thin air.
Que Sera
  • #563,808
  • Dec 5, 2020 5:56am Dec 5, 2020 5:56am
Quoting VM.
{quote} This is a very good analysis, but on fundamental side, I can't agree with you. Stimulus is important, but mostly priced in. I think that even larger stimulus is priced in as market expects Biden to spend a lot when he gets into the White House. No deal is not priced in, analysts at Goldman Sachs and other investment banks predicted 20% chance of no deal at most. But talks are stopped, and a path to a deal does not seem to exist at the moment. Will the leaders find it? Possible, but very difficult given the promises they gave internally....
This is an opposing view, but one that I can accept; after all it is logical. However, when I look at the buy volume in gold, it does seem to suggest that stimulus might still be able to move gold upwards. Is stimulus priced in? I'm not sure, that is the same as me believing that bad brexit news are priced in as well. Purely speculation/guess-work.

I can respect your view, let's see what happens.

I have read some posts that are bearish, targeting 1.3180. But if we were to check November's prices, even a price of 1.3180 would be considered bullish. Only a break of 1.3070 can be considered bearish. Even if we pullback 100-150 pips next week, I believe we will still be green overall in December. Just my thoughts. For those who are nimble, I guess you can be jumping in and out. Swing traders will probably take a bullish view on Cable gunning for 1.36/7.

Speaking of gold, would anyone like to give their views on gold? I know this thread is about Cable, so my apologies if this isn't allowed.
  • #563,809
  • Edited 6:17am Dec 5, 2020 6:04am | Edited 6:17am
I can help you out ,

Uk doesn't export much ,in fact Uk exports less than Greece in goods as a percentage of GDP.
then you need to Half that bar on this chart that goes to the EU.

lets call it 10%

Netherlands is one of our biggest trading partners they rely on the UK

This is why you need to analyse who no deal affects individually in regard to the export market of goods.



Quoting Catempire
{quote} Black swan. U.K. economy will go into short term melt down people haven’t quite grasped how damaging this will be... it is our only decent trading partner. 50%+ of our industry is traded with EU. eu have said on no deal 20% tariff on fish, 5 day waits in Dover, this is just 1 market, even longer in Dover to begin with given this government aren’t prepared. this will have rippling effects running across the whole country Ftse will dip into the 4’s for sure $22>$1000 fill yer boots !!
Attached Image (click to enlarge)
Click to Enlarge Name: goods exports as a percentage of gdp .png Size: 282 KB
On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #563,810
  • Dec 5, 2020 6:21am Dec 5, 2020 6:21am
then from that 10% of exports
a lot of things wouldn't be affected by a tariff.

Say cars we always look at is 10% tariff ,fresh fish I think is no tariff today.

But cars=the Uk would have to subsidise that industry .This is why level playing field matters to the EU.....Its not level if EU is that much bigger .
Also I believe more UK built cars would stay in the Uk .

I don't believe the EU can stop financial services being carried out mostly in London .

Its really needs thinking through beyond the headlines .
To me its the initial disruption and the unknown is the most negative part of no deal.
On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #563,811
  • Dec 5, 2020 6:46am Dec 5, 2020 6:46am
Quoting Bones
then from that 10% of exports a lot of things wouldn't be affected by a tariff. Say cars we always look at is 10% tariff ,fresh fish I think is no tariff today. But cars=the Uk would have to subsidise that industry .This is why level playing field matters to the EU.....Its not level if EU is that much bigger . Also I believe more UK built cars would stay in the Uk . I don't believe the EU can stop financial services being carried out mostly in London . Its really needs thinking through beyond the headlines . To me its the initial disruption and...
Well not quite. Let me help you out,

Not really sure what you mean by this "Netherlands is one of our biggest trading partners they rely on the UK" they are part of the single market.

Europe have said if we expect to keep our foreign fishing waters than we would be banned from selling fish to Europe. Wether that happens or not remains to be seen but they are well within their right to do so, that's why compromise is always nessacery.

Import and export combined with Europe accounts for 25% of the countries GDP.

For most goods going into Europe their will be a global tarif applied: UK tariffs from 1 January 2021 - GOV.UK (www.gov.uk)

Then take into account of 25% effect on GDP (Import / export combined) how much of it will have a knock on effect on the rest of the country, goods and services ?

Cost of imports hits the high street, it is akin to increasing taxes, which the worst imaginable thing to do to an economy already on its knees, less money will be being spent & be far less viable to sell certain goods abroad which then has an effect on all the industries across the lands, jobs & how viable businesses are.
What is the effects of delays on the shipping to both the companies and the end user & what effect will this have on peoples jobs?

This is worth reading Bones rgarding the finance industry. UK financial services industry: operating in the EU after Brexit - Macfarlanes

The direct effect & simple statistic of 25% of GDP is really a bit of a weak argument in a far more complex economy.
Que Sera
  • #563,812
  • Dec 5, 2020 6:53am Dec 5, 2020 6:53am
here is the uk, near a huge commercial area of the eu.
but if there are no special agreements with the eu, trading in the eu will be bitter.
  • #563,813
  • Dec 5, 2020 6:54am Dec 5, 2020 6:54am
From the link

"What does no deal mean for accessing EU markets?

In the event that no deal is reached at the end of the implementation period (whether extended or not) the UK’s current EU single market access rights will cease. This means that from 1 January 2021, UK firms will no longer be able to use their passports and World Trade Organisation (WTO) rules will apply. The WTO does not provide for any access rights. UK firms will therefore only be able to access markets in accordance with local law requirements in each Member State3. Firms that wish to continue providing services in the EU following Brexit are likely to be well progressed with their Brexit structuring plans. Given the very real possibility of a no-deal Brexit at the end of the implementation period, UK firms should continue to implement contingency plans."

Not really sure why you think a no deal wouldn't effect the finance industry... it will effect every industry.

Financial regulator warns firms to be ready for end of Brexit transition in a month’s time - Business Insider
Que Sera
  • #563,814
  • Dec 5, 2020 6:59am Dec 5, 2020 6:59am
It's financial suicide on many levels we certainly won't end up with the utopian dream you thought you were going to get.

What we had was the best available possibility and undoubtedly it will effect this country in ways that people cant comprehend.

Did you watch News Night last night ??
Que Sera
  • #563,815
  • Dec 5, 2020 7:00am Dec 5, 2020 7:00am
Who will be impacted by less imports? Europe. The cost of transporting goods is rather small relative to the cost of an item as a whole, so other worldwide suppliers could be found if Europe wanted to shoot itself in the foot.
  • #563,816
  • Dec 5, 2020 7:03am Dec 5, 2020 7:03am
Quoting Steamroller
Who will be impacted by less imports? Europe. The cost of transporting goods is rather small relative to the cost of an item as a whole, so other worldwide suppliers could be found if Europe wanted to shoot itself in the foot.
They have 27 countries to trade with Steamroller - we need them more than they need us.

"They'll come begging afterwards" was the usual mantra spouted by theBrexit right.

I can assure you they won't. We won't be able to negotiate a better deal afterwards anymore than before & they effects are far reaching.
Que Sera
  • #563,817
  • Edited Dec 6, 2020 6:02am Dec 5, 2020 7:05am | Edited Dec 6, 2020 6:02am
Quoting Catempire
{quote} Well not quite. Let me help you out, Not really sure what you mean by this "Netherlands is one of our biggest trading partners they rely on the UK" they are part of the single market. Europe have said if we expect to keep our foreign fishing waters than we would be banned from selling fish to Europe. Wether that happens or not remains to be seen but they are well within their right to do so, that's why compromise is always nessacery. Import and export combined with Europe accounts for 25% of the countries GDP. For most goods going into Europe...
I'm deadly serious an export country can't threaten tariffs to the market its sending its goods unless theres another reason thats not economics.
With the EU= thats the case, economics isn't the reasoning .

Whatever doesn't come from EU in the future will arrive another way ,be home made or not needed.
No way can you add in the EU imports as our problem .In fact it's the opposite, we import too much...
If EU ban UK fish because we took our waters back, after paying our way out of the project, then that would step things up to another level.
Sounds like a trade war.
Netherlands are part of the single market, but only 5-7 EU countries really matter individually to the UK regarding trade.

So Netherlands is a goods exporting type country and Uk are a major market for those exports.
"Germany(+) 24.2% Belgium(+) 10.7% United Kingdom(+) 8.8% France(+) 8.8% Italy(+) 4.2% (2017)"

Surely you can see you can't add all of Europe as one country who would all suffer the same on no deal.
Attached Image
On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #563,818
  • Dec 5, 2020 7:15am Dec 5, 2020 7:15am
Quoting Bones
{quote} I'm deadly serious an export country can't threaten tariffs to the market its sending its goods unless theres another reason thats not economics. With the EU= thats the case, economics isn't the reasoning . Whatever doesn't come from EU in the future will arrive another way ,or be home made. no way can you add in the imports as our problem . If EU ban UK fish because we took our waters back, after paying our way out of the project, then that would step things up to another level. Netherlands are part of the single market, but only 5 countries...
"If EU ban UK fish because we took our waters back, after paying our way out of the project, then that would step things up to another level."

What level is this ? They don't have trade with the UK inthe same way I don't have to allow you into my business, well within their rights, you might not like it but that's the thing with sitting on a board with 27 other countrys you don't always get your own way. That's business.

The fishing industry is tiny in relation to the UK GDP but a good example as one that the Conartists used as part of the reasoning.

Still not sure about the effects on the European operated finance industry... of course will effect it if there is a no deal.
Que Sera
  • #563,819
  • Dec 5, 2020 7:15am Dec 5, 2020 7:15am
You are also underestimating the fragility of the Eurozone. Without the UK, Germany now has to bail out France, Italy, Spain, Greece and Portugal. The UK is off the hook.
  • #563,820
  • Dec 5, 2020 7:19am Dec 5, 2020 7:19am
Quoting Steamroller
You are also underestimating the fragility of the Eurozone. Without the UK, Germany now has to bail out France, Italy, Spain, Greece and Portugal. The UK is off the hook.
Off the hook ? If you look at the NET gains being a member it far out weighs the expense of being a member considerinng freedom of trade and 0 tarifs. That is the whole point.

"If EU ban UK fish because we took our waters back, after paying our way out of the project, then that would step things up to another level."

This style of take real astounds me...

Ok so WE get evrything our own way ??

Reality check: it doesn't work like that... you wont let our industry in, we stop buying... give and take, compromise, that's life & business.
Que Sera
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