Based on time series interest rate differential-based currency band method and the measured average weighted rates to current GBPUSD and EURUSD target zones, the estimated exchange rate target zone for EURGBP is 700 PIPs of which 0.9050 as actual upper ceiling and the 0.8250 as the estimated lower ceiling. The current monetary price movement to downward by their interest rate differential-based monetary price trend.
At 0.8600, the pairs was compressed (rebound) and presently already resumed to downward by her interest rate differential monetary price trend. The current interest rate differential monetary price trends allow for both GBP and EUR to be carried by both CHF and JPY.
Trading strategies:
Sell/short at highest rate (by technical method or by currency band method) Average monthly volatility, 150 PIPs Stop loss 150 PIPs Target, 0.8250 for estimated 250 PIPs, estimate by May 2019 Risk Category: Low
Risk management: stop loss position managed overtime to risk-free trading position as permitted by the market price movement to downward by maintaining 150 PIPs above the current rate. At such, should the current rate 150 PIPsbelow the entry rate then the trading position manageable to risk free.
Or,
Long/buy from interdays high (by technical method or by currency band method) Average interdays volatility, 100 PIPs Stop loss 100 PIPs above interdays high Target, 100 PIPs (interdays low) Risk Category: Medium
Risk management: stop loss position managed overtime to risk-free trading position as permitted by the market price movement to downward by maintaining 100 PIPs above the current rate. At such, should the current rate 100 PIPs below the entry rate then the trading position manageable to risk free.
Or,
Long/buy from daily high (by technical method or currency band method) Average daily low/high, 50 PIPs and may lower Stop loss 50 PIPs above daily high Target, 50 PIPs (daily low) Risk Category: High
Risk management: stop loss position managed overtime to risk-free trading position as permitted by the market price movement to downward by maintaining 50 PIPs above the current rate. At such, should the current rate 100 PIPs below the entry rate then the trading position manageable to risk free.
Note:
JLS Trade means I also trade this pair, but not prime target.
Your comments and opinion are welcomed. This analysis is integrating technical method to currency band method for easier to follow. This analysis will not be changed or altered unless there is major changes on the monetary policy made by the BOE, ECB and the Fed during the downward movement of the monetary price trend.
today very different reactions of eurusd and gbpusd to FOMC rate announcment, shows that the max for gpbusd was reached some days ago at 1.338. we have to monitor eurgbp, as if itstays capped by 0.865 where it is right now then we will have mathematically eurusd largely inferior to 0.865*1.338=1.157. and if today max on gbpusd is not revisited (very likely ) this become eurusd<1.147
lapin_eliott
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sorry to disturb again but here is again a major problem on your analysis. if eurgbp is bounded by above by ~0.90, if gbpusd is bounded by above by ~1.33 and eurusd by ~1.18, then we have eurgbp<0.90 -> eurusd<0.90*gbpusd, -> max(eurusd)<0.9*max(gbpusd), with max(gbpusd)~1.33, we obtain indeed max(eurusd)<~1.18, which is coherent with your analysis. HOWEVER, if you consider that now eurgbp is on its way down and if we do not revisit the 0.9 area for eurgbp then we have max(eurgbp)<~0.865 and we have the new result max(eurusd)<1.15 and therefore your move to 1.18 for eurusd becomes mathematically impossible. it is very important to have a better view of what you expect on eurgbp from now
@Johanes, i think you are making a major mistake on eurgbp, the "result" you use as you mention before about the counter intuitive direction of eurgbp according to the direction of eurusd/gbusd and eurjpy/gbpjpy, is not backed by rigorous maths only empirical economic and financial semi-maths. we are up to a big surprise on eurgbp meaning : eurgbp down while eurjpy AND gbpjpy down