Cable: Terror attack in Manchester late last night puts pressure on pound, with outflows into Yen. Likely to see pressure in Cable during the session, also factoring recent changes in sentiment because of the conservative lead slipping in recent poles and tougher Brexit stance on both sides of the channel.
Also levered money and asset managers gross short positions in cable are higher than net longs, so based on this a higher number of professional speculators are positioned short Sterling.
Three main trade ideas:
Will start trading early capture some of the FX moves in play before the data, go flat just before data, as when the setups come into play will take my planned trades.
- Gold – Long at Pivot – inline with trend and risk off sentiment on terror
- Cable – Short Pivot – Brexit, Terror and election
- Euro – Long Pivot – Weak dollar trend EU data inline no fundamental changes inline with trend.
Trade 1 – Short Cable
- Entry Short, range play at pivot or classic entry break of S1
- Bias short on election labour poll tightening and Brexit negotiations toughening.
- Short Bias, overnight trend bearish on terror attack in Manchester.
- Target 1 – S1
- Target 2 – last week lows
- Target 3 – s2
- Risk reward 2:1 or 4:1 + depending on entry.
Trade 2 – Long gold
- Entry long at pivot
- Bias long because of UK terror risk, dollar remains weaker.
- Target 1 session highs
- Target 2 R1 high of the range.
- RR – 2 dollar risk, 6 dollar reward 3:1
Trade 3 long Euro
- Long euro at pivot.
- Trend play, wait for euro pull back to pivot for entry.
- Take setup before data, and after on strong numbers.
- Bias long, strong data, weak dollar, staying onside of the current trend.
- Weak pound based on terror attacks could see more interest in the euro play.
- Target 1 – High of the day
- Target 2 – R1
- Stop below 10 ticks below pivot.
- RR, 3:1 +