With the conservatives winning a strong majority I believe the outlook for Brexit (and the UK economy) has improved. Running up to when Boris was elected and when the results came out the GBP initially rallied, then recently fell 4.35% since. As there is generally an inverse correlation between the FTSE and GBP (due to large cap FTSE companies making profits in USD), and with February historically being a weaker month, I think going long on GBPUSD is a good risk/reward trade. However, timing is crucial. The fundamentals are there, and there has been a double bottom formation on the weekly chart. This is educational and not investment advice.
The last CoT data for the past month:
Market M/D/Y % of Dealers Long % of Dealers Short
BRITISH POUND STERLING - 12/17/2019 5 16.8
BRITISH POUND STERLING - 12/10/2019 22.4 23.8
BRITISH POUND STERLING - 12/3/2019 25.2 20.6
BRITISH POUND STERLING - 11/26/2019 27.1 17.8
Tall_Short
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PLEASE IGNORE LAST COMMENT
The last CoT data for GBPUSD for the past month:
Market M/D/Y % of Dealers Long % of Dealers Short
BRITISH POUND STERLING - 12/17/2019 5 16.8
BRITISH POUND STERLING - 12/10/2019 22.4 23.8
BRITISH POUND STERLING - 12/3/2019 25.2 20.6
BRITISH POUND STERLING - 11/26/2019 27.1 17.8
U.S. DOLLAR INDEX - 12/17/2019 2.2 55
U.S. DOLLAR INDEX - 12/10/2019 1.8 68.3
U.S. DOLLAR INDEX - 12/3/2019 2 71.6
U.S. DOLLAR INDEX - 11/26/2019 1.7 76.5
WHAT THE CoT DATA SHOWS US! WHAT THE BIG GUYS ARE DOING!!!
As you can see, as of 11/26/19, 76.5% of dealers were short USD, with 1.7% long. 17.8% dealers were short GBP and 27.1% were long. This was before a dramatic move up. As shown in the data over the past month, the net positions of the dealers have been very short USD, and almost neutral on GBP (maybe slightly short). However, a flip maybe starting to occur. Watch and wait for the next CoT report and see what has changed.
The dramatic move of % of dealers long from 22.4% in 12/10.19, to 5% on the 12/17/19 could be down to the strength in the FTSE and the Santa rally and the inverse correlation between FTSE and GBP. However, I believe there is a strong argument for going LONG GBPUSD before February (as February is usually a weaker month for the markets). Educational purposes only, not investment advice.
Closed: 13199.6
211.7 pips profit.
Used pulling SL up on hourly timeframe to exit trade.