British Pound, Pass the Baton to the Bears

In the last two months the Cable has appreciated 4.6% to lift prices to 3 1/2 month highs but prices are finding resistance at the 50% Fibonacci level just under 1.5600 in June futures. To put things into perspective this has not been a one way trade as prior to the latest appreciation the Pound got creamed, down nearly 9% in just over two months before bottoming out March 12th.

Wade into bearish trade willing to weather the trade up to the 61.8% Fibonacci level at 1.5755 if necessary. .. add to the position when confirmed futures are moving south. This would be delivered on a close under 1.5400 on this contract.

British Pound Futures chart, May 6, 2013

British Pound Futures chart, May 6, 2013

The BoE meets on Thursday but is expected to keep rates at current levels at 0.50%. They are not the only Central Bank meeting this week as the BoC and the RBA also meet so we may experience some volatility this week. Because of this I would advise scaling into the trade or utilizing the sale of put options 1:1 to cushion your futures positions.

My initial target is the 20 day MA (dark blue line) though I see an intermediate objective at the 50 day MA (light blue line) in the coming weeks. If fortunate enough to see futures roll over from here once futures settle under 1.5200 trail stops and try to capitalize on a move back to the March lows just under 1.4900.

As always, I’m here to discuss specifics and give guidance. Give me a call…

To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997

Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.
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