Good morning traders.
After another quiet morning session we got some action courtesy of UK PM May offering the baby and the bathwater in an attempt to get her withdrawal bill through UK Parliament. R1 was triggered at 1.1180.
It seems that she is now offering the House of Commons another go at getting her bill passed by including some form of customs union and the offer to include MP´s a vote on whether there should be a second referendum! The plot thickens.
Whether this will be enough to get her bill passed is another matter. The initial response doesn’t look that favourable. However, there are better analyses around if you want a more in depth dig into what all this means. I will stick to how this will or could effect the eurusd.
From our point of view if there is a breakthrough in Brexit negotiations which could result in a closer trading relationship or even a chance at staying in the EU via another referendum then this could be positive the GBP and by association the euro as it reduces uncertainty. However, there is still plenty of road left in this one before we get to the finishing line so all we can do now is keep a close watch on the market.
As the moves yesterday ( in eurusd, gbpusd and eurgbp) were entirely on the back of this Brexit issue I tweeted to move stops to break even and take partial profit at around the 1.1165 mark. We did eventually trade lower to 1.1154 which was enough to give us a full +26 model result.
For today there is again nothing data wise until this evening when we get the FOMC meeting minutes.
The 240m Chart
There is little to add to what we already know and have discussed. We are still hugging the 1.1150 level and need a break of the 1.12 or the 1.1111 yearly low to start any decent momentum. The FOMC minutes this evening could help spark a move.
The Hour Chart
Levels as per.
R1 and S1 remain the same as yesterday. However, as we have now tested R1 and backed off there is a stronger likelihood that we are going to test further down the chart. One idea is to watch for any tests higher first thing this morning to take out overnight highs, the grey area noted on the chart. A short scalp at this point could have legs down to the spike low or lower.
We were right on the button yesterday with our R1 level which even though the move was sparked by news, held firm. It is yet another example of why the levels I show on the charts do the job. They are based on structure, closing prices and where I believe resting orders will be in the market. Its not rocket science :).
Have a good one.