This has been the month of contrarian trades set-ups in the portfolio; Long Gold, Long Eurocurrency, Long Coffee + Lumber, Long Uranium ETF (URA) – still short German BUXL (German Long Bond). To this heap of contrarian signals, I added long British Pound futures earlier this week. Let’s take a look at it:
We have the day chart of the British Pound futures below: since the BREXIT event day candle, the market has traded progressively lower – as per the blue overlay highlighting the event driven day. Extending the Fib overlay delivers trade expectations on the way down. The market seems to be finding some support at the 61.8% extension level (1.21) – and this serves as my risk in the current long trade set up as per the MST signal (purple up arrow). My portfolio is geared against the more mainstream thought-process of a continued strong USD Index – which may prove to be the correct side of the trade. I say this as I observe the relentless push to newer new highs across the US Equity space, to which the USD Index is directly correlated. As long as the bid for US equities persists, the USD may go higher as well. Though, I am trading the program, and I am currently in active months for the Pound + Euro – which is correlated – yet still I like the R/R from the long side.
I’ve posted up the weekly chart of the Pound below; closing line chart shows a triple bottom at the 1.22 closing price. So any weekly and or multi-day closing below this signifies renewed weakness down to the $1.14 level. What I like from this long position is the proximity to risk (exit ~.02 cents) and the more recent weekly bullish crossover in the 3 week (blue) fast stochastic with acceleration to the upside, in concert with the upturn in the slow (orange) 14 week stochastic – as per the blue overlay boxed out lower panel data. This type of technical display could suggest some unwinding of the short GBR trade.
Futures Trading 