GBP/EURO~Maximizing Your Euro Holdings
GBP/EURO – Maximising Your Euro Holdings
This chart could be used for perpetual swaps or could be of value to those looking to maximise their Euro holdings by positioning them temporarily into Great British Pounds.
The RSI and Parallel channel have been brilliant indicators of when to long and short the Great British Pound ("GBP") in Euro. The 200 week SMA also is of added benefit as it appears to act as a sturdy resistance level mid trend. In other words, exiting the trade when we approach it from a long or short perspective is an additional tactic to secure profits and avoid the risk of how it repels the approaching price action.
As a EURO holder or someone with high reserves in EURO, technically you could have an open position to buy GBP at €1.0864 or a little lower and have a tight stop in place at €1.0507. You could gauge this stop to your risk tolerance and your entry (in the green zone). The likelihood of a bounce from these lower green levels is historically high and you would have a reasonable trade with a defined stop so you never have too much pain. If the trade plays out and you have banked 10% in a full move you can sell your GBP for approx. €1.20 locking in a liquid tax free 10-11% profit (which you originally bought for €1.0864 per GBP).
Historic Buy and Sell Zone Returns (To Increase EURO holdings)
o BUY GBP in Oct 2016 at €1.08 and SELL at €1.20 in Dec 2016 (11% Euro Increase over 3 months)
o BUY GBP in Aug 2017 at €1.08 at any stage over next 100 months (2 - 7 % Euro Increase over
o those 100 months). If you sold before reaching the 200 week moving average you would have nailed this trade with min 7% profit.
o BUY GBP in Aug 2019 at €1.08 and SELL in Dec 2019 at €1.20 in Dec 2019 (11% Euro Increase
over 5 months).
o BUY GBP in Mar 2020 at €1.08 and SELL in Dec 2019 at €1.13 in Apr 2020 (5% Euro Increase
over 1 months). Again selling before reaching 200 week moving average resistance would have been a great tactic.
Obviously for those wanting to increase their GBP they can inverse this concept and contra trade these moves. If anyone would like a similar chart for positioning in EURO to increase GBP, please ask in the comments.
What’s interesting is that historically the months of Aug – Oct are good buy opportunities for people wanting to increase their EURO holdings via GBP positioning. Whilst we are in that time frame at the minute, our RSI is not providing us with a definitive signal and as we are closer to the upper Sell Zone there does not appear to a reasonable trade at present using this strategy.
Going forward we can press play on this chart on trading view and see where price has moved and if an opportunity presents itself. I will keep you posted on if we move into the red or green.
PUKA
This chart could be used for perpetual swaps or could be of value to those looking to maximise their Euro holdings by positioning them temporarily into Great British Pounds.
The RSI and Parallel channel have been brilliant indicators of when to long and short the Great British Pound ("GBP") in Euro. The 200 week SMA also is of added benefit as it appears to act as a sturdy resistance level mid trend. In other words, exiting the trade when we approach it from a long or short perspective is an additional tactic to secure profits and avoid the risk of how it repels the approaching price action.
As a EURO holder or someone with high reserves in EURO, technically you could have an open position to buy GBP at €1.0864 or a little lower and have a tight stop in place at €1.0507. You could gauge this stop to your risk tolerance and your entry (in the green zone). The likelihood of a bounce from these lower green levels is historically high and you would have a reasonable trade with a defined stop so you never have too much pain. If the trade plays out and you have banked 10% in a full move you can sell your GBP for approx. €1.20 locking in a liquid tax free 10-11% profit (which you originally bought for €1.0864 per GBP).
Historic Buy and Sell Zone Returns (To Increase EURO holdings)
o BUY GBP in Oct 2016 at €1.08 and SELL at €1.20 in Dec 2016 (11% Euro Increase over 3 months)
o BUY GBP in Aug 2017 at €1.08 at any stage over next 100 months (2 - 7 % Euro Increase over
o those 100 months). If you sold before reaching the 200 week moving average you would have nailed this trade with min 7% profit.
o BUY GBP in Aug 2019 at €1.08 and SELL in Dec 2019 at €1.20 in Dec 2019 (11% Euro Increase
over 5 months).
o BUY GBP in Mar 2020 at €1.08 and SELL in Dec 2019 at €1.13 in Apr 2020 (5% Euro Increase
over 1 months). Again selling before reaching 200 week moving average resistance would have been a great tactic.
Obviously for those wanting to increase their GBP they can inverse this concept and contra trade these moves. If anyone would like a similar chart for positioning in EURO to increase GBP, please ask in the comments.
What’s interesting is that historically the months of Aug – Oct are good buy opportunities for people wanting to increase their EURO holdings via GBP positioning. Whilst we are in that time frame at the minute, our RSI is not providing us with a definitive signal and as we are closer to the upper Sell Zone there does not appear to a reasonable trade at present using this strategy.
Going forward we can press play on this chart on trading view and see where price has moved and if an opportunity presents itself. I will keep you posted on if we move into the red or green.
PUKA
Comment:
With what appears to be a major secular price shift in USD/JPY and a move in US 10Y Treasuries Yield (Charts Shared a few weeks ago), we could see some theatrics in other currency pairs like GBP/EUR so it is possible that we breach the upper sell level on this GBP/EUR chart and enter a new secular trend. It is worth keeping this in mind as this would be a whole new trade set up leaving the current strategy as proposed invalidated.
