The Brexit vote has many implications, but one thing is for sure and that is the economic environment of the United Kingdom. This would trickle down to employment, exports, and growth.
Taking a look a this week’s COT report, we see a rollback on short holdings of the Great Britain Pound. This gives us on the insights of either profit taking or changing probabilities of a Brexit actually happening.
Speculators maintained a short position near market close while commercial traders hedging long 124,129 contracts. For the weeks ahead, I do not recommend trading the Sterling Pound given Forex brokers are raising the margin requirements in attempts to avoid a similar Swiss National Bank unpeg movement. This would not be a worthwhile experience to repeat.
Nevertheless, I am still eyeing several trade opportunities for the upcoming week.
First up with the USDJPY pair, I continue to remain bearish especially with a stronger outlook for the Japanese Yen. I currently have the three most recent levels setup for my short entry. With the next rate hike pushed further back, I am overall bearish on the U.S. Dollar for the time being.
Similarly, I am expecting a similar downwards breakout on the USDCAD pair. Over on the 4-hour time frame, it has been consolidating between this wedge since the beginning of May. I expect to see some “real” action in the nearing the end of June to early July as price consolidates even further.