A few longer-term trading opportunities if we get a Brexit deal in place later this year. We have also added further great resources on this page of our website to help you PROFIT WILDLY from brexit: https://financialsource.co/longer-term-trade-ideas-if-we-get-a-brexit-deal/
How do you express a view of a possible Brexit breakthrough coming up in September? How can we look to position ourselves for that potential move happening? And how can we look to trade it?
Now, obviously from the currency side, the first area that we want to focus on is, of course, the pound versus the U.S. dollar.
We've seen the pound pushup recently, quite excessively. We've now broken through a key weekly trend line to the upside, currently above that 1.32 important resistance. And if we do, obviously we'll need to see where the pound is trading at that time.
But, you know, looking for a top-side target, if there is any type of deal to be had looking for a potential, depending on where we are at that time, for a potential spike up to 1.36, ultimately even up to 1.40, 1.42, 1.44, I don't think would be that surprising if you're looking at that medium-term perspective, like you said, or a longer-term perspective, not looking for a short day trade, but just looking at a more longer-term thing, something that you can, you know, put into the market and let it run for awhile.
Depending on where we are, I think a good target for Cable, like you asked, can be close to 1.42, 1.44, depending on what happens to the dollar, of course, depending on the out-performance narrative of the rest of the world versus the U.S. economy, that is something that we'll obviously need to revisit, but, you know, if a breakthrough is to be had, they reckon it's going to happen in September.
I'm not seeing the pound ending 1.36 by that time. Obviously, I can be wrong with that. We might be trading at that levels. Don't really see that happening with the fundamental backdrop right now.
But as long as we're above that weekly trend line, if we do get that breakthrough, first target, easy target, I think would be 1.35 in the medium term. In the longer term, 1.44. But to be honest, you know, with this rally we've seen in the pound, even though I would expect upside from a breakthrough deal in the pound.
I wouldn't really look to trade as a core position, as you ask from a medium to longer-term position, I wouldn't really look to trade something like the pound currency, really. The one area that I think can really outperform in terms a medium to longer-term position, if we get a deal, is looking at something like the FTSE.
So if we take a look at the UK 100, if we just compare this to the S&P, right? So let's open up the S&P on the daily, and we've basically reached the levels, the all-time-high levels. So we've recovered the entire COVID-19 drop already. If we compare this to something like the Euro stocks, for example, let's go to the daily, even though we haven't retraced all the way to the upside, we've had a fair, decent run and recovery of that drop.
This one view for me is the reason why I'm a little bit skeptical of this rally we've had in the pound recently. From an equity point of view, markets aren't buying into the optimism that we're seeing in the pound right now.
And for me, if there is a deal to be had in September or November or whatever, I think the ultimate trade for me from a medium to longer-term position would be a catch up trade in something like the UK 100 or the FTSE, you know, catching up to some of its peers, like the S&P, like the Euro stocks, like the DAX.
NASDAQ, obviously, is in a little bit of a different league right now in terms of performance since COVID, but if we just compare it to the S&P and the DAX and something like the Euro stocks, I think this will be a great catch up trade, you know, with a deal in mind with the deal in the bag, I think, you know, placing a first target at that 7,000 level can be achievable, you know, in a medium-term trade.
It's not a short-term one that you'll need to stress about, and what happens if and if this happens and if that happens. It's a medium to longer-term trade. Something that you can take as a type of position trade, and you just let that run to the upside. Obviously, there'll be oscillations on the way there, but I think if a deal is to be had, this is a good type of catch-up trade to focus on for the FTSE 100. I think that will be an area where it'll be more overweight compared to the British pound.
Even though I do expect the British pound to gain, I think there's a lot more catch up, a lot more value to be had in something like the FTSE when compared to the pound with this recent rally we've seen in Sterling.
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