TRADE IDEAS

May 13, 2023

BoE’s potential rate hiking path seems to be longer than FED’s.
Just considering central bank divergence, the above pull back to the old resistance and new support of the rectangle chart pattern might be a good opportunity.

My concern about the GBPUSD trade idea is CFTC GBP Net Non-Commercial Future Positions(yellow line) as you can see in the above graph. There is not that extreme long positioning in the long term but in the short term, there is an uptrend which might lead to some profit taking. You can also see the short-term action in the blue bar graph.
Building a long position piece by piece as a long-term trade idea might be a better option to not be caught in a profit-taking wave.

The South African rand came under huge pressure this week due to,
With the above news, the price action was triggered and we saw a breakout from the 6-month-long Cup and Handle chart pattern with resistance at the 18.59 levels that we mentioned in the previous report.
This breakout could potentially result in a chart pattern target of 20.65 levels.
A pullback on a weekly graph might be an opportunity.
Or considering the above CFTC ZAR Net Non-Commercial Future Positions (yellow line), you can say that there is an extremely short positioning in ZAR which may result in a short squeeze. Therefore taking a long bet in ZAR for the short term is another option but having a stop-loss is very crucial for this kind of an idea since trading against a trend might have bad consequences.
However, the weekly chart might not be the only option to trade USDZAR. As you can see in the below monthly graph there might be a much longer-term trade idea.

The chart formed an approximately 7-years-long Ascending Triangle chart pattern as a bullish continuation in an uptrend, with resistance at 18.6 levels.
This breakout could potentially result in a chart pattern target of 29.8 levels.

CADJPY pair could be considered as a risk-on and risk-off trade. If there is a rising recession probability we expect to see a decline in the above pair.
So if we see a solution for the debt ceiling argument in the upcoming week, we might again see positive pricing with the support of the risk-on sentiment.
The chart formed an approximately 4-month-long Rectangle chart pattern as a bullish reversal after a downtrend, with resistance at 100.64 levels.
A daily close above 101.65 levels would validate the breakout from the first 6-month-long Rectangle chart pattern.
This breakout could potentially result in a chart pattern target of 106.7 levels.

The chart might be forming an approximately 2-month-long Rectangle chart pattern as a bullish continuation in an uptrend, with support at the 14.5 level and resistance at the 21 level.
This breakout could potentially result in a chart pattern target of 30.8 levels.
Also with a broader perspective, the chart formed an approximately 8-month-long H&S chart pattern as a bullish reversal after a downtrend, with resistance at 21 levels.
A daily close above 21.63 levels would validate the breakout from the first 6-month-long H&S chart pattern.
This breakout could potentially result in a chart pattern target of 40 levels.

The chart formed an approximately 10-month-long Ascending Triangle Chart Pattern as a bullish reversal after a downtrend, with resistance at 2050 levels.
A daily close above 2110 levels would validate the breakout from the first 10-month-long Ascending Triangle Chart Pattern.
This breakout could potentially result in a chart pattern target of 4660 levels.

The chart formed an approximately 11-month-long Symmetrical Triangle Chart Pattern as a bullish reversal after a downtrend or a bearish continuation in a downtrend.
A daily close below 9.83 levels would validate the breakdown from the first 11-month-long Symmetrical Triangle Chart Pattern or A daily close above 14.7 levels would validate the breakout from the 11-month-long Symmetrical Triangle Chart Pattern.