Cable has recouped to the 1.2500 area amid the dollar’s flurry lower. An intraday low was left at 1.2418, which left both yesterday’s low at 1.2406 and the 50-day moving average at 1.2402 unchallenged. The government lost its appeal in the case about Brexit process at the Supreme Court, as had been mostly anticipated. Given the ruling Tory-party’s majority, and pledges from many Labour MPs not to obstruct the will of the people, the government should be able to put through a succinctly-worded bill through the House of Parliament and the House of Lords, though the Scottish National Party has already said it will be gunning for 50 amendments. Expectations remain for Cable to maintain a range in the low-to-mid 1.20s for now, but I still see risks being skewed to the downside in the face of Fed tightening and ongoing likelihood for ongoing messy Brexit-related wrangling. UK Parliamentary procedure is seldom straight forward or risk free.
Elsewhere, I took a SHORT position on EURAUD with an entry at 1.4140. This had a set up similar to the GBPJPY trade earlier with a strong spike down last week to a new low. The reverse has not been as pronounced as the GBPJPY but is similar. The retrace has paused at the 23.6 Fibonacci level and the trade is against the higher timeframe trend. Therefore target 1 remains less than the 14 DATR and south of a strong resistance area at 1.4290. The confluence of the 20 and 50 DMA together with the 38.2 Fibonacci level will provide strong resistance for target 2 at the 50.0 Fibonacci level and 1.4375.
The RSI remains negative along with the Parabolic SAR and should the 20 DMA cross below the 50 DMA then this too would be a negative and add to the risk of this trade and suggest a resumption of the longer term downtrend.
/ has had a 100% start to 2017 with five trades achieving both Targets 1 and 2 and this sixth trade hitting target 1 for a total net gain of 1218 pips.
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