EUR/GBP: Trading Brexit 📈

Hello traders, happy Wednesday! Time to make some money.

Today's Trade of the Day is EUR/GBP. With Brexit pessimism rising, I expect further weakness in the pound during the week.

Here is the complete analysis.

TECHNICALS:

The pair broke above a long-term falling channel, but big players will likely drain liquidity to get into the market at more favorable prices. A roll reversal to the lower 0.90xx levels could provide a buying opportunity.

POSITIONING:

Hedge funds increased their bearish bets slightly in the previous week, but there is still room to the upside until we reach a 52-week extreme positioning. Currently 40k contracts shorts, extreme positioning at 60k. More downside potential for the pound.

INTEREST RATES:

2-year yield differentials have still to catch up with the recent rise in the exchange rate.
FUNDAMENTALS:

EU’s chief negotiator Barnier says next 36 hours will be critical to fate of negotiations with UK.

== SUMMARY ==

BUY LIMIT @ 0.9020
Final Take-Profit @ 0.9135
SL @ 0.8980
R/R: 3:1

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