CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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The Brexit has changed everything

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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10 days ago the pair was trading 800 points lower. The Brexit has changed everything. Many analysts predicted a selloff in sterling followed by a quick recovery due to the implications for the wider Eurozone.

However, so far this hasn’t happened. It has been a one way street for EUR/GBP since Brexit.

Going forward, if the 50% retracement level is broken on the monthly chart at 0.8400 there may be further upside to the next level at 0.8740 with some resistance at 0.8600.

Traders looking for support can see from the chart that 0.8000 has been significant in the past.

It looks as though the longer uncertainty looms over the UK, the more upside there is for the pair due to sterling weakness. It’ll be interesting to see if right wing movements in continental Europe can gain pace which could reverse the outlook for the Euro.

Trade ideas

LONG: As long as the political climate doesn’t change, taking a long position, once 0.8400 has been cleared, makes sense in my view. However, due to current volatility in any sterling pair stop losses need to be placed. 0.8350 may make sense as a stop here giving traders a good risk to reward ratio if profit targets are set at 0.8600 (1:4) and 0.8740 (1:6.8) respectively.

SHORT: If the pair fails to break 0.8400 and close above this level, short positions with a profit target of 0.8000 could be put in place.

 

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.