The final countdown (June 18)

The final countdown was a song from a group named Europe and goes back to 1986. At the time it reached no 1 in 25 countries. 30 years later there is a new countdown that will affect Europe (or not). All senior traders will not go home on Thursday night and telephone lines between the FED, BOE and ECB will be on fire while the count goes on. The outcome of the referendum could change the Europe we know forever.The GBP was dropping like a stone but a very unfortunate event stopped it. MP Cox, was assassinated on Thursday and the GBP bounced. All scheduled referendum activities were cancelled. Economics and politics are based on sentiment and such an event could affect the voters. Particularly the undecided ones.

Apart from the GBP that managed to close the week with a small profit, the winner of the week was the JPY. Mr Kuroda from the BOJ decided not to take any action and this strengthened the JPY by 242 pips (always according to my statistic tool).
Only two pairs made significant moves. The Eur/Jpy and the Gbp/Jpy that closed with losses of 275 and 288 pips respectively. The Gbp/Jpy was trading 400 pips lower but after the sad event it started moving higher to finally close just below 150.

Apart from the UK referendum another important even will take place this week. Mrs Yellen will testify before the House Financial Services Committee on Tuesday and Wednesday and could also give a push to the dollar pairs.

I will not recommend any trades this week. It is extremely dangerous to get caught on the wrong side of the market with zero liquidity (ie unknown spread size). If you absolutely want to trade, try the Eur/Usd, Aud/Usd, Usd/Cad and Eur/Aud that could remain in a range and offer trading opportunities from lower time frames. Aim for a profit of 20-30 pips (with respective stop loss) and close the trades before the referendum.

 

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