Why sterling could make surprise move upward versus euro
22nd January 2019 08:49
by Alistair Strang from Trends and Targets
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Sterling rallied after MPs rejected the Brexit plan, but our chartist can plot a path to the €1.20 level.
GBP vs EURO
This important pairing is showing early signs of some surprises. Perhaps the UK's policy of studied incompetence is about to yield fruit as the pairing need only close a session above €1.13775 presently to exceed the downtrend since 2015.
From our perspective, this enters a brave new world, one which does not include parity as an immediate potential!
The immediate story is fairly straightforward. In the event the relationship trades above €1.1412 or closes a session above the blue line on the chart below, it enters a phase where some recovery to an initial €1.1643 makes sense.
Visually, a stumble is expected at such a level but, if bettered, sterling could power upward to €1.2034, and we've no doubt any rise to such a level will provoke some stutters. Since the Brexit vote, the €1.20 level has provided a 'ceiling' for any rises.
Of course, there will be a UK politician making plans to sabotage any strength for the pound in an effort to make themselves unelectable!
Unfortunately, the earliest sign for a serious drop shall come, if the pair now trades below €1.105, this permitting weakness down to an initial €1.0875. Secondary, if broken, calculates at €1.069.
Perhaps more importantly, by breaking below red on the chart, the pairing shall once again find itself languishing in parity territory.
For now, it's perhaps worth watching for any surprising moves upward, something we really did not anticipate writing in regard to the UK pound.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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