Viva Catalonia! Gracias! A dip to be bought
The pair sell off Friday, in a mix of out flows due to Catalonia situation and Brexit charade news of warmth and fuzziness... I been enough times to the theater to know a bad play when I see one... If EU27 haven't even started yet to talk internally about how they want their future relationship with UK to be, and have no thoughts on the possibility nor any preparations of a "No deal" scenario it just shows how badly in touch with the UK mentality and fundamentals they are. Total ignorance and incompetence, believing they can push the same tactics as with Greece. May o mayo, this smells a hard Brexit long way...
Add to this the now very likely BOE "No Hike" scenario. They are certainly worried about a weak GBP as it drives up inflation - but what can they do? As BOE Vice deputy Cunliffe said himself last week "I see no sustainable domestic inflation pressure" and that's the whole dilemma. Hiking now wont solve anything but make things worse as it will squeeze the consumer and the economy further, and the short lived surge in GBP will achieve nothing. In fact, it will most likely guaranty an even bigger fall later when the Brexit reality kicks in for real.
The Friday sell off pictures an almost text book deep ZZ correction and I expect it to be completed with a small gap down on Sunday opening, mostly due to Catalonia, offering a gift of a dip that should be bought imo. It hard to judge how big the gap will be and maybe it has closed already before most platforms opens. I expect this pair to then continue the main correction up above .91, before the main GBP rally kicks in later towards years end.
NOTE: This is just an idea and no trading advice, there is a risk I may be wrong and if you trade this you ought to manage your risk properly.
Add to this the now very likely BOE "No Hike" scenario. They are certainly worried about a weak GBP as it drives up inflation - but what can they do? As BOE Vice deputy Cunliffe said himself last week "I see no sustainable domestic inflation pressure" and that's the whole dilemma. Hiking now wont solve anything but make things worse as it will squeeze the consumer and the economy further, and the short lived surge in GBP will achieve nothing. In fact, it will most likely guaranty an even bigger fall later when the Brexit reality kicks in for real.
The Friday sell off pictures an almost text book deep ZZ correction and I expect it to be completed with a small gap down on Sunday opening, mostly due to Catalonia, offering a gift of a dip that should be bought imo. It hard to judge how big the gap will be and maybe it has closed already before most platforms opens. I expect this pair to then continue the main correction up above .91, before the main GBP rally kicks in later towards years end.
NOTE: This is just an idea and no trading advice, there is a risk I may be wrong and if you trade this you ought to manage your risk properly.
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4H perspective
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Daily view
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3 scenarios for how I see this may developing, of course, there is a 4th option, that it breaks down below the small double bottom at .8855 but I see that quite unlikely, but it is possible.
