On Monday, October 14, 2019, I joined Dale Pinkert on the Forex Analytix Community Experience to speak about the rally in the GBP at the end of the last trading week. I spoke about how the GBP had much more room to run given how the new turn of events in Brexit has changed the fundamental landscape for the GBP.
Unbelievably, all of my calls made on Monday have already been hit and this trading week hasn’t even ended yet. Better yet is news that hit the wires this morning that the EU has accepted the UK’s deal. Now, it is in the hands of the UK Parliament. Keep eyes on how this plays out. It will most certainly drive market flows in the short term for the GBP.
Check out also my levels and technical analysis during my segment and enjoy the show! Make sure you watch to the end to hear my commentary on the S&P 500 and equity markets.
Well not completely… But we are very excited to announce that I did a mini merger last week. FM Capital Group has merged its investment advisory services with Bay Street Capital Holdings, a Black-owned RIA based in Palo Alto. I am now Senior Investment Advisor at Bay Street Capital Holdings and Executive Director of FM Capital Group. FM Capital Group maintains its services for angel investors and educational services for traders.
I’ve actually been approached twice before about selling my firm. The reason I chose Bay Street is that 1) the firm is owned by a Black man, William Huston (who also went to GT and Vandy like me!) with 2) a mission to serve minority-owned (non-profit) organizations and family offices; 3) I get to maintain FM Capital Group; and 4) I’m going to learn A TON. This is an area of the market I’ve really wanted to break into – serving institutional clients – and the fact that Bay Street seeks out orgs that are run by minorities just really resonates with me.
2020 is already different! I’m excited about this next chapter for me and FM Capital Group!
Check out the positioning in the forex market as we were headed into today’s FOMC meeting. Though Walle Smith points out here the crowding into GBP shorts, look at the USD positioning last week as reported by the CFTC. In light of today’s 25bps rate cut, 2 dissenting FOMC members who wanted to hold on interest rates, and verbal confirmation during the press conference from Federal Reserve Governor Powell that there will be no cycle of interest rate cuts, the positioning in the market is not at all stretched. With all of that just happening, there was still room in the long USD trade. Which is very interesting when you look at the trends against the other major world currencies. The market has significant room before it even is considered crowded with long USD positions.
My take is that the Fed has pretty much given markets the green light with no real reason to sell the USD. And it is likely that the USD continues to move higher still.
The USD has been relentless in its rally this year, particularly against the EUR, GBP, AUD, and NZD. WHY?
In case you missed it, the United States has the highest interest rates in the G7. Remember when, the top spot was held by Australia and New Zealand?
The Federal Reserve has not delivered an interest rate cut in over 10 years.
The United States is in its longest economic expansion on record. While we seem to witness blips of weakness in the data this year, economic releases from durable goods order to consumer confidence to inflation and GDP all point to a still robust American economy.
Nothing but USD dollar strength in response
Yeah, I don’t see any reason to sell the dollar either.
When the Federal Reserve finally delivers on all of the dovish rhetoric it has graced us all with since early 2018, the market will most certainly react by selling USD. The larger the cut, the larger the selloff because the market will be shocked at anything larger than a 50 basis points cut. But USD weakness won’t last without a strong statement from the Fed that signals more cuts to come. I’m not so sure that the fundamentals supports a cycle of rate cuts. Even this anticipated rate cut is debatable. Plus, the Fed has been unsuccessful at talking down the USD for over 2 years now. I doubt tomorrow’s meeting changes the market’s mind very much.
The $GBPUSD has had a great run this year and is now starting to probe the post-Brexit levels in 2016/17. Monday’s dumping of the $GBPUSD hit some major Fibonacci extension levels on the latest leg down. Now markets gear up for tomorrow’s announcement.
Back in January, I attended the African Diaspora Investment Symposium (#ADIS19). CGTN was there reporting on the investment scene in Silicon Valley for Africa. China is heavily invested in Africa already and Mark Niu was at ADIS19 to give report to Chinese viewers. He was thrilled to meet a women investing in Africa and I am really happy to be able to provide this point of view. As a Nigerian woman born in the Bay Area, I know that I have a very unique view of the investment opportunities in Nigeria. Thanks to technology and social media, my view has become more continental. I meet founders based all over Africa doing really good work. It is exciting times and Mark’s story came out well. Thanks Mark!
I stand by corrections. A market ALWAYS corrects. ALWAYS. Nothing moves in a straight line. And the GBP, in particular. The GBP is highly likely to retrace price moves with a correction that moves to the Fibonacci retracement levels. But the $EURGBP has defied all of these adages. For over 2 months, the $EURGBP has impossibly moved in a straight line!
But if we drill down into this rally, the daily chart shows a correction that has actually moved higher. This currency pair has, indeed, experienced an correction. A correction through time rather than an actual correction through price (that would see a move lower). And when a currency pair cannot correct through price, it is extremely strong indication of the strength of the trend move.
So what could make the $EURGBP move into a correction lower? Perhaps a restart of the quantitative easing program by the European Central Bank? Perhaps. It would have to surprise markets so that fact that this is already being whispered means it is already being priced in. Maybe a quick Brexit deal that pleases all sides? Maybe but this is so unlikely it is improbable. With no real fundamental reason for a move to the downside, I expect the $EURGBP to continue to grind higher for another rally higher. The 0.9050 level is the next target for bulls with downside targets as the Fibonacci levels pictured above on the daily chart.
Related reads: ON THE AIR with F.A.C.E. (FaithMightFX) ECB prepares for a second wave of quantitative easing (New Europe)
On Wednesday, July 3rd, an hour after my appearance the TD Ameritrade Network, I was back on the air with Dale Pinkert and the Forex Analytix Community (F.A.C.E.). We talked about the current breakdown in the Great British pound, looking specifically at levels of importance in the $EURGBP, $GBPUSD, $GBPCAD, $GBPNZD, and the $GBPAUD.
Dale is a veteran in the business and masterful interviewer. He asked some great questions about the trading courses that I have available and how clients fare with my investment advisory services. So you learn about that too!
I kicked off the Fourth of July holiday on Wednesday, July 3rd with a special guest appearance on the TDA Network show, FUTURES with Ben Lichtenstein. It is fun talking to Ben about currency markets because he comes at it from a purely futures lens and I from a purely forex lens. For example, when we discuss the Australian dollar, he’ll say $6A_F and I’m actually referring to the $GBPAUD. I just love this juxtaposition and the insights we discuss as a result.
The central banks were front and center throughout my segment. The RBA might be done with interest rate hikes while the Federal Reserve probably cuts interest rates this month after all (see the Bloomberg story linked below) and the BoE figures out how to maneuver the latest Brexit drama. What does that mean for the summer forex market?
Watch the show below!
Click the image to watch
Related reads:Aussie About To Appreciate Against The US Dollar (FaithMightFX) The Myth of the Tight U.S. Labor Market (Bloomberg)
Amazon share price fell badly towards the end of last year from 1965.54 to 1676.34. This fall might be as a result of the release of third-quarter earnings. Despite concerns about its forward guidance, price of $AMZN is beginning to rise which might make price reach the previous all time high of 2050.30. Throughout the month of May, the $AMZN price was in the lower region of the Bollinger bands. A breakout upwards occurred mid June and price has since then resumed to the upper region of the Bollinger bands. The trendlines have been broken after the dip.
As price rallies, Ichimoku has been able to show us a bullish future and a breakout upwards of the cloud has occurred. This indicates a significant bullish takeover. In April, RSI was able to show an overbought region before the dip. Now the oversold region has been shown on the RSI daily chart which signalled a rally. The efforts of the bulls might make price reach a new high in 2019
There has been low volatility with the $NZDUSD pair from December 2018 to the end of March 2019. Towards the end of March, the dip in price made $NZDUSD reach 0.64896 from the major resistance of 0.69362. The trendlines have been broken to the upside indicating a change of trend. In the first week of June, price was able to reach the middle line of the Bollinger bands. It tried to break it before a correction occurred.
As it stands, in the last two trading days, price was able to break the middle line to the upside. The bulls might have been able to gather momentum for a complete bullish movement. RSI before the breakout from the trendlines has shown oversold positions. The NZD is presently gaining strength against the USD. Price of $NZDUSD might go back to the resistance level of 0.69362 in the next few weeks. Ichimoku still shows the bears are in charge. Though $NZDUSD price is presently in the cloud with the bulls in charge, a breakout from the cloud upwards might conveniently push price to 0.69362.
