Keeping your head while others lose theirs

Over the course of the next few days we are going to hear plenty of Brexit headlines. Good ones, and bad ones in a constant loop. The question to ask is, 'how do I trade the changing Brexit sentiment in a sensible way'.

Be patient and sell at key technical levels

Well, first of all, although there has been some largish moves on the GBP, most of the times key technical areas have provided obvious ceilings to the price. We have seen that over and over again in the GBP/USD pair over the last few weeks. The price might rally on some ''good news' only to have it faded as soon as it hits an obvious area of resistance. This is because the basic Brexit predicament for Theresa May is the same, 'the Brexit back-stop problem remains'. Until this specific issue is resolved, (it may not be), then most 'good news' is there to be sold.

In the 1 hour chart below you can see how the 200EMA provided key resistance.

Similarly, the 100 EMA on the 4 hour chart contained all GBP rallies.

So, trading the GBP short at key technical levels makes sense. Here is a set-up I am looking at for this week off the Daily chart and 100EMA and Weekly Pivot zone. see here

Be patient and wait for decent Brexit headlines

The other tactic is to wait patiently for the squawk to give you a decent Brexit headline to trade a quick spike. Now, if you have never used a squawk before, but would like to get a sense of one - see here for a free squawk you can use. Alternatively, go to Ransquawk or Livesquawk and try it free for a certain number of days. This is not a sponsored post, so I have no agenda here other than to point out that a squawk is jolly helpful in this headline driven Brexit situation. The trick here is to remember that unless the N.Ireland border issue is resolved, the GBP will be sold off again.

Be ready to buy GBP if everything changes

Adam had this post out yesterday from SocGen reminding folks of this reality. See here. The GBP is heavily oversold, and it is Brexit woes that has it slumped at historic lows. A positive outcome for Brexit negotiations, e.g UK Parliament vote through Brexit deal and/or the N.Irish border issue gets solved will result in some strong GBP buying on a risk reversal. If you can get into that move quickly it will pay off over the next few weeks.

For a quick look at possible outcomes , check out Justin's helpful post here.