Weekly Market Analysis: Traders Brace for Brexit Vote
- EUR/USD and GBP/USD – volatility set to increase as Brexit vote looms…
We’re steering clear of EUR/USD and GBP/USD headed into the British referendum (Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term vote) scheduled for later this week (June 23rd – 24th). The timeline for the vote is as follows:
Voting will get underway on June 23rd and the counting of votes will commence at 10pm on the 23rd after the polls close. The final result will be announced around “breakfast time” on Friday June 24th. The key thing to keep in mind this week is that Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term will likely be high, especially later in the week, and as a result most brokers will increase margin requirements as they expect major price volatility and gaps, so be prepared.
We officially have no view and are not sure if the Brexit will be a 'yes' or 'no' vote. The charts and key levels become far less relevant this week given the expected volatility and uncertainty surrounding this vote. We strongly suggest not trying to be a ‘hero’ by gambling on the outcome of the British referendum this week.
If the vote result is to leave, the GBP/USD market is expected to drop 10 to 15% lower almost instantly, we might slide even further but that selling may not sustain itself, so expect a recovery higher if prices overshoot to the downside too quickly.
If the result is to stay, the GBPUSD market will most likely push up at least 5% instantly and attempt to trade into the mid 1.50 region. Before the announcement, traders will be watching short-term key support and resistance levels for opportunities.
The GBP/USD key levels are 1.4720 and 1.4050. The EUR/USD key levels are 1.1415 and 1.1100. However, remember, after the announcement, key levels become almost irrelevant in the wake of heightened volatility.
GBPUSD
EURUSD
GOLD – gold continues moving higher
We remain long (upward) biased on gold whilst above the major support at $1190-$1200. This market has exploded higher after testing that area three weeks ago and has now reclaimed a short-term support area around $1235 to $1244. Any rotation lower would be a potential buying opportunity. We are watching the near-term support around $1242 – $1256 and we are specifically waiting for a price action buy signal before committing to a long position. Note that the Brexit vote may have major implications for gold if the public chooses to leave, so traders should be mindful of that.
S&P500 – S&P500 trades between key levels
For the S&P500, it all depends on 2075 – 2080 resistance on the upside and 2022 – 2030 support to the downside this week. Short-term traders can play both sides of this market this week. A move above resistance could trigger a move back up to recent highs, however if price reverses at resistance, we could see a move back down into support. A move into support could be a buying opportunity, but a failure of support signals further downside.
Obviously, volatility will pick up later in the week as the Brexit vote may have major implications for S&P500 if the UK votes to leave the EU, so traders should be mindful of that.
This article was written byNial Fuller. Nial is a highly regarded professional trader and author. He is the founder of Learn To Trade The Market, the worlds foremost trading education resource. To learn more, visit www.LearnToTradeTheMarket.com
We’re steering clear of EUR/USD and GBP/USD headed into the British referendum (Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term vote) scheduled for later this week (June 23rd – 24th). The timeline for the vote is as follows:
Voting will get underway on June 23rd and the counting of votes will commence at 10pm on the 23rd after the polls close. The final result will be announced around “breakfast time” on Friday June 24th. The key thing to keep in mind this week is that Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term will likely be high, especially later in the week, and as a result most brokers will increase margin requirements as they expect major price volatility and gaps, so be prepared.
We officially have no view and are not sure if the Brexit will be a 'yes' or 'no' vote. The charts and key levels become far less relevant this week given the expected volatility and uncertainty surrounding this vote. We strongly suggest not trying to be a ‘hero’ by gambling on the outcome of the British referendum this week.
If the vote result is to leave, the GBP/USD market is expected to drop 10 to 15% lower almost instantly, we might slide even further but that selling may not sustain itself, so expect a recovery higher if prices overshoot to the downside too quickly.
If the result is to stay, the GBPUSD market will most likely push up at least 5% instantly and attempt to trade into the mid 1.50 region. Before the announcement, traders will be watching short-term key support and resistance levels for opportunities.
The GBP/USD key levels are 1.4720 and 1.4050. The EUR/USD key levels are 1.1415 and 1.1100. However, remember, after the announcement, key levels become almost irrelevant in the wake of heightened volatility.
GBPUSD
EURUSD
GOLD – gold continues moving higher
We remain long (upward) biased on gold whilst above the major support at $1190-$1200. This market has exploded higher after testing that area three weeks ago and has now reclaimed a short-term support area around $1235 to $1244. Any rotation lower would be a potential buying opportunity. We are watching the near-term support around $1242 – $1256 and we are specifically waiting for a price action buy signal before committing to a long position. Note that the Brexit vote may have major implications for gold if the public chooses to leave, so traders should be mindful of that.
S&P500 – S&P500 trades between key levels
For the S&P500, it all depends on 2075 – 2080 resistance on the upside and 2022 – 2030 support to the downside this week. Short-term traders can play both sides of this market this week. A move above resistance could trigger a move back up to recent highs, however if price reverses at resistance, we could see a move back down into support. A move into support could be a buying opportunity, but a failure of support signals further downside.
Obviously, volatility will pick up later in the week as the Brexit vote may have major implications for S&P500 if the UK votes to leave the EU, so traders should be mindful of that.
This article was written byNial Fuller. Nial is a highly regarded professional trader and author. He is the founder of Learn To Trade The Market, the worlds foremost trading education resource. To learn more, visit www.LearnToTradeTheMarket.com