We broke up out the channel, the Feb resistance line and we’re now busting the long term trendline from Oct 2009 through July 2011.
There’s unquestionable support down below and all the signs are pointing up. Ordinarily I’d be looking to trade the break up
So why am I so insistent on getting short?
In the current environment trading fundamentals have almost become extinct, just look at the stock market. Trading US fundamentals are a joke at the moment. We’ve just been trading QE for the last few years. The sheer size of it all means the focus is on what the Fed is going to do rather than what the economy is going to do. That’s different for trading the UK and Europe.
I’m trading gut feeling and UK/EU fundamentals. My view is well known that I see a UK recovery ahead of Europe. While I don’t expect the UK to rocket into the good times I see us as being a bit less rubbish than Europe.
My long term view over the last few years has been that we will see low rates and sluggish growth globally and I expect that to continue. The UK is coming off a low while Europe is still looking to bottom out. Further data confirmation of that should see the pair move lower as if a UK recovery is fully confirmed we will look a good prospect for money flows looking for a home.
In the meantime my trades face some headwinds. The first hurdles will be the broken channel line. In hindsight I’m not too keen on the Feb trendline. It’s points are too short term so I’m going to discount it in my thoughts. The next speed bump will be the bottom of the channel and the 100 & 55 dma’s at 0.8537 and 0.8525 respectively. Under there we have the 200 wma at 0.8511.
So there’s some tech to chew through but at the end of the day, on a long term trade, I will take fundamentals over technicals every time.
I’ll be happy to short trade up to 0.9000 as long as the reasons for the trades still stand. I will also continue to job the intraday range between 0.85 and 0.87. My profit target will be towards 0.8000. A break below the 0.8400 area will likely be a catalyst.
