Cable is the gift that just keeps on giving, short term trades keep popping up, but the longer-term trends since August remain intact, presenting other opportunities.
On the geopolitical front, Brexit is far from over and the first shots from the dispatch box from the Conservatives post the General Election confirms this.
All gains Cable had made from the election bounce have evaporated as Johnson announced in his opening address to the new Parliament. That he would “write Britain’s exit from the EU next year into law without an extension in the transition period.”
This decision to place a law-abiding time-limited on Brexit brings a ‘hard Brexit’ back into the frame.
This is why the 1-hour and 4-hour charts are flashing trend breakdowns as seen here.
Why this timeline is such a risk, is that most had expected the “year-long” Brexit transition to December 2020, be extended into 2021 and even 2022 as trade negotiations with the EU will drag.
Therefore, if the last three years are anything to go by, seeing an agreement by end of next year would be difficult. Britain would likely exit the EU without a negotiated deal but one that is based on the World Trade Organization terms. Not being the outcomes the market wants and certainly the risky option for the UK economy, considering the EU is its biggest trading partner.
That risk, however, hasn’t fully translated into the longer-term trends and the daily and weekly charts are showing that the uptrend in the pair remains, not only intact but could be signalling a ‘buy the dips’ scenario.
Both show that the up-channel remains strong and that a test of the lower range has not been reached. If, as expected the political discord continues to throw up risks followed by ‘resolve’ there is a clear pattern to remain long Cable into 2020.
It’s why Cable will be as exciting as ever as we move into a new stage of Brexit in 2020.
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