Brexit: The Pound Will Survive, The Euro Will Not

Lior Alkalay - INO.com Contributor - Forex


Friday, June 24th will be remembered as a Black Day for the British Pound. On that day, investors, shocked by the “leave” vote for Brexit, pushed the Pound off a cliff, toward its worst daily loss since 1985. And yet, despite the Pound being at the eye of the storm after the Brexit vote, it’s not the Pound’s future that investors should fear.

Brexit Impact On The Pound Sterling

The impact Brexit will have on the Pound should be divided into two ranges—short to mid-term and long-term.

In the short to mid-term, it’s undeniable that the Pound will face significant and broad pressures—monetarily, fiscally and economically. The Bank of England will likely need to deploy extra liquidity measures to assure stability in the financial system which, effectively, is monetary easing. From a political standpoint, uncertainty has increased dramatically. On Friday, the UK Prime Minister, David Cameron, resigned, and his “heir apparent” is still unclear. But even more, troubling is the future of Scotland within the United Kingdom. The Scots will be compelled to cast another vote, this time on their willingness to leave the United Kingdom and stay with the European Union. Continue reading "Brexit: The Pound Will Survive, The Euro Will Not"

Topping Euro Signals New Highs For Precious Metals

Aibek Burabayev - INO.com Contributor - Metals


This past January I wrote about European gold discussing two possible scenarios as the market was at the crossroads. The upside scenario played out. It is good to act once we know the direction as it gives us more confidence. Today I will review gold vs. euro and add silver to the pack. But the very first chart I will dedicate to the peaking euro as the price of the metals is quoted in a single currency.

Chart 1. Euro/$ Weekly: Price Is At The Top

Weekly Chart of Euro/Dollar
Chart courtesy of tradingview.com

The EURUSD is the most liquid currency pair in the world and it shows the strength of the US dollar, which is the measure of everything in the financial world. The global trend for the pair is down. The Euro hit a multi-decade bottom in 2015 and since then we have been stuck in a wide consolidation with a price range of 10 big figures within $1.0462-1.1467. I didn't take the 2015 high at $1.1714 as you can see that it was just a false break above the horizontal resistance. The price quickly fell back below resistance and closed a dip below it.

Last week shaped a reversal Doji candle, which, of course, needs further confirmation on the chart. We should see a quick drop below the middle of the channel (black dashed line) at the $1.1240 level.

The euro should break below $1.0462 to confirm the continuation of the global trend; it will certainly add to the bullishness of precious metals against this currency. If we get a weekly/monthly close above $1.1467, then we should watch closely after the reversal which will undermine the metals market in Europe. The third path is a prolonged consolidation as a result of the price reversal from the lower margin at $1.0462.

Chart 2. Gold vs. Euro Monthly: Break Up & Correction, Ready For Action!

Monthly Chart of Gold vs. Euro
Chart courtesy of tradingview.com

Gold was nimble enough to penetrate the upside of the downtrend at EUR 1065 in February. It is a good trigger for buyers. Patient traders prefer to wait for a good pullback to enter with safe stop (just below the trend) for a low-risk trade. And we can see this classic price action on the chart. It looks like the pullback has finished at the low of EUR 1065 (same price for the breakup) as the price rapidly advanced higher. Once the price passes the high at EUR 1165, we can move the stop to breakeven and enjoy the lossless bet.

The target is located on the upside of the trend at EUR 1270, if you read the earlier gold-euro post, you can see that the AB/CD concept also points to that level (EUR 1272). It's not a coincidence as both the trend model and the AB/CD concept use simple mathematical calculations.

Chart 3. Silver vs. Euro Monthly: Wait for Breakout!

Monthly Chart of Silver vs. Euro
Chart courtesy of tradingview.com

Silver didn't follow gold yet. Indeed, the price penetrated the dashed red trendline last October, but we didn't see the follow-through upside price action so far. Instead, the metal has been squeezed with a decreasing apex of the symmetrical triangle (highlighted in blue), one of the typical visual forms of consolidation.

It's good to trade on the breakout. The most expected action is upside penetration of the triangle amid rising a gold price. The target for the upside move is located at the EUR 18.75 level, calculated as a distance of the base (EUR 4.9, the widest part of the triangle) added to the break point. This is the area of the 2013 August high. In a less probable downside scenario the target is set at EUR 7.73 level.

Intelligent trades!

Aibek Burabayev
INO.com Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

Top Forex Pairs VS. Gold: Another One Bites The Dust

Aibek Burabayev - INO.com Contributor - Metals


A year ago I wrote a post to compare the top currencies dynamics against Gold inside of the year. Today I want to repeat the experiment to see which one could beat the safe haven and which one couldn't. This time, you will see a modified version of the chart where the inverse metal crosses show not Gold's (last year version), but the currencies' dynamics for easier eye perception.

To remind you of the short list, there are seven currencies compared: US dollar (USD) and 6 components of the US dollar index placed by weight: Euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK) and the Swiss franc (CHF). Continue reading "Top Forex Pairs VS. Gold: Another One Bites The Dust"

Will 2016 Bring A Turnaround In FX?

Lior Alkalay - INO.com Contributor - Forex


The year 2015, no doubt, has been a year to remember. Markets saw the first Fed rate hike in years which pushed the Dollar ever higher. In the Eurozone, the ECB's QE pushed the Euro to lows it hasn't seen in years. And in China, the Yuan, too, is being pushed to record lows as China's economy gets squeezed.

Now, with 2016 practically knocking at the door, the question is will 2016 be the year of a turnaround? Or will the themes of 2015 continue to dominate? Here are some major areas to focus on which can help us figure it all out. Continue reading "Will 2016 Bring A Turnaround In FX?"

Forex Currency Pairs: How to Choose the Right One Right From the Start

As many countries there are that have their own currency, there are currency pairs to trade. This does not mean you should start off studying the movements of the Guatemalan Quetzal. New traders need to stick to those currencies whose indicators and movements have been well documented.

The three major currency pairs are the EUR/USD, GBP/USD and USD/JPY. If you didn’t already notice, the US dollar is listed in each one. That’s because this it the most traded currency in the market, and the one that has been studied at length.

There are three very good reasons why you should stick with these three currency pairs:
• All of them are well established currency pairs that are traded widely. This type of liquidity guarantees that you are going to profit from price changes.
• They all have the US dollar, which means that the most amount of activity will be during the New York trading hours. This adds to the liquidity as this is typically when the highest amount of Forex trading is taking place.
• Since they are so popular, a new trader is going to find a wealth of Forex trading systems online that can help them in trading these pairs successfully.

Which Ones Should You Avoid?

Any currency that is considered to be exotic or uncommon should be avoided by new traders. In some instances the financial state of the country is too unstable to be able to read the charts properly. For others, there just is not enough information available to you. A new trader needs to use as many resources as possible before placing a trade. Unless you have some first hand knowledge of Guatemala and its future financial state, you should stay far away from trading the uncommon currencies.

Focus your attention instead on the: Continue reading "Forex Currency Pairs: How to Choose the Right One Right From the Start"