Healthy Move for #CABLE #USD

As the new month for June swings into action, and traders coming from a a US & London holiday the natural price behavior to retrieve back to where it left off was a market norm reaction. This is in preparation of the coming week's event risk that would increase market volatility and affirmation of trend direction.

As mentioned from our last call on CABLE dated the  25th of May, that " Session pullbacks are not to be discounted at this stage even with CABLE." Apparently did to a low @1.4460 levels to this writing as the poll survey on the BREXIT influenced the market's retreat. Meanwhile, the overlapping week's trading and entering the new month for position adjustments have been expected. Even with the daily session retreat of the DXY @95.46 was likewise seem to be a healthy correction.

CCY Corner: Divergent Trend on EURO & CABLE 2

The aftermath on the stock market rebound is still seen as a relief price recovery of the market after several declines were seen. Which was obviously felt by investors in the first two weeks of trading for 2016. This has given some headway for the currency market to make its own moves as prices continue its trend movements today.

Therefore choosing the 'Right Currency Cross rate' was made based on the divergent trend of price and market behavior of the two pairs that led to combination them into one trade with a fairly larger exposure. However this trade is well  defined into its process and has a limited time frame based on the price comparison / directional difference including the market's behavior and price change.

EURGBP Cross Rate OVERLAY

CCY Corner: Divergent Trend on EURO & CABLE

Insight ll: Preparing for Risk Event: EURO USD CABLE

Based on the current reports so far; which is given so far...what is the best case scenario for the market's reaction. Due diligence is a must for those who would be opt to take a trade/s within the next three-to-four trading days.

Preparing for such an important risk event for traders who prefer to trade the Euro, let alone a combination of trades that would be suitable is what we all need to come up with. During our analysis meeting in preparation taking a stand to absorb market price swings can only be accomplished with comparing price action before any immediate reaction not only on spot prices but relatively with futures volume and open interest and how options are being played out.

This is where the "Principles of Trading a Contagion, Contango and Backwardation Correlated Markets" should be carefully understood. A clear example of MegaTrade101 - CIPHER3 analysis; along with the recent COT report already provided how Euro shorts and US Dollar positions have unwind; where a divergent trend has occurred from previous formations. The 2nd quarter position adjustments and roll-overs would prevail post Greece which would show it true colors by then. Watch for our price calls once Asia starts trading for the week.

The primary trend still prevails in a range bound trading pattern for the Dow Jones with a few exceptions for the USD, EURO and CABLE. These are the pairs to consider when taking on the market at this point. So far the USD top heavy configuration on a tech angle would weigh on any price recovery from persistent bull players that have been encourage from positive USD sentiment reports. Thus, a synchronized price action from the USD and Dow would provide a glimpse prior to the real deal in the making. Take a cue from our previous market approach on 'Price Action Analysis' using a simple yet powerful correlation on the market as defined in Forex Trading Methodology 2 as a due diligence point of reference & analysis during the QE from the FED.

CCY Corner: #GBPUSD Divergence, Sentiments & Momentum

The near term weakness in the USD after softening reports on the US economy have finally given long remaining short-sellers on the Pound to cover positions. As Cable prices have started to recover from its lower levels, speculative sentiments contrary to price and volume have lagged behind when last week's volume slightly measured above its moving average volumes of transaction.

Speculative sentiments have fallen to negative territory while prices have recovered simply based from the Hawkish BoE minutes directing a favorable reaction for Cable prices to move to its current levels @1.5180 which also serves as the initial point of daily price resistance on the Asian session before another push higher can take place.

Meanwhile, a visible divergence have occurred when prices reached its lowest level @1.4565. Momentum and volumes relatively were lower and an unconvincing gradual buildup of prices from short-covering have supported the recent move on the Pound. Asian trading opening were mildly soft across the board and have remained within the day's range. However, a further increase in market would continue to prevail for Cable, as prices would still swing higher with some session pullbacks to come with it. For as long as the US Dollar would continue it's corrective move; the tech perspective on GBPUSD would be a continued V formation that would signify a positive tone moving forward, especially if no considerable change in direction with its corresponding EURGBP Cross rate would be made. This divergence would affect the EURUSD and the AUDUSD more effectedly as the US Dollar declines. 

Reference Trade in Effect

GBPUSD as of April 15, 2015 

GBPUSD_EURGBP DIVERGENT TREND

A Cipher3 Applied Analysis & a Combination of a Counter-trade Strategy