Free Forex Trading Signals: GBPUSD and EURUSD March-April 2016

■ Market: Forex

■ Asset: GBPUSD and EURUSD

■ TCI Forecast: GBPUSD Reversal in March and Uptrend (↑)

Nothing is discussed more these days than Brexit. Britain’s prime minister set June 23rd, 2016, as the date for a referendum on Britain’s membership in the European Union. The Forex market reacts strongly to Brexit and its possible effects.

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Eurozone Challenges and What They Mean for EUR/USD

Against the general market view, I believe a potential Brexit will hurt the EU more than Britain. It will damage the EU economically, but even more politically and geopolitically. It will also create uncertainty about which country might leave next. The Eurozone will inevitably feel the effects of Brexit in the coming months. Additionally, the problem of uncontrolled immigration in the EU worsens, but can still be managed. In this uncertain environment, EURUSD is trading lower.

Major Investment Banks Forecast EURUSD in 2016

The table below shows major investment banks’ forecasts for EURUSD in 2016. The average forecast is 1.073 for Q1 and 1.053 for Q4.

Table: EURUSD rate in 2016

EURUSD	Q1 2016	Q2 2016	Q3 2016	Q4 2016
HSBC	1.15	1.16	1.18	1.20
Citigroup	1.09	1.06	1.03	1.03
Credit Suisse	1.04	1.03	1.01	1.00
Barclays	1.07	1.03	0.98	0.95
JP Morgan	1.05	1.03	1.08	1.13
Morgan Stanley	1.04	1.03	1.02	1.01
Average	1.073	1.057	1.050	1.053

Britain’s Outlook and Brexit Implications

Polls on Brexit are tightening, but recent surveys show most people want to leave. On the other hand, bookmakers’ odds clearly favor ‘stay.’ The current odds for ‘stay’ are 2/5, which means a payout of just 1.40. If Brexit happens, the effects on Britain’s economy remain uncertain. Here are some key facts about the upcoming referendum.

Facts and Implications of a Brexit

(1) Britain joined the EEC (European Economic Community) in 1973.

(2) In the 1975 referendum on staying in the EEC, the ‘Yes’ vote won with 17.4 million votes, or 67.23%.

(3) About 45% of all UK exports go to EU countries.

(4) About 52% of all UK imports come from EU countries.

(5) If Brexit happens, Britain will save some of the money it currently sends to the EU, but to access the Single Market, it will still have to pay the ‘weaker’ European countries.

(6) The impact on growth and jobs will likely be negative in the next few years. However, the government will have more control over the labor market.

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TCI Analysis on EURUSD and GBPUSD

The TradingCenter Indicator (TCI) is a unique technical analysis tool developed by Giorgos Protonotarios for TradingCenter. 🔗 Link: » More About TCI

TCI on EURUSD

On February 20, 2016, the TCI on EURUSD showed +6.27%, which is generally considered an overbought level for Forex assets. The next day, EURUSD hit a local intraday high of 1.1376 and closed near that high at 1.1320. Although EURUSD reached new local highs, the TCI signaled a trend reversal (showing +6.07%). The following day, the reversal occurred, and the EURUSD downtrend began.

As March 2016 begins, the TCI on EURUSD suggests at least 2-3 more days of downtrend, followed by a possible uptrend reversal. However, this reversal is not confirmed yet, so traders should be cautious. Here are the TCI signals and forecasts for the next 20 days of EURUSD trading (press the slider to see the TCI indications).

TCI on GBPUSD

On February 26, 2016, the TCI on GBPUSD hit -5.81%, which is generally seen as an oversold level for Forex assets. After that, the TCI showed a clear trend reversal (TCI = -4.24%) and signaled the start of long positions on GBPUSD.

Here are the past TCI signals for GBPUSD and the forecast for the next 20 trading days. (Press the slider to see the TCI indications).

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EURUSD and GBPUSD Monthly Statistics

March and April could be good months to go long on EURUSD. Here are the statistics for EURUSD and GBPUSD based on 13.5 years of research by TradingCenter.

March looks neutral for GBPUSD, with a slight average loss of -0.21%, but it has ended bullish more often than not (8 times up, 6 times down). The best month to go long on GBPUSD is April, with an average gain of +1.32% and 12 positive months versus 2 negative. Remember April.

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Conclusion

The British Pound Sterling is under heavy pressure, with GBPUSD trading near the 2009 low of 1.3630. The all-time low for GBP against USD is 1.0438 (February 26, 1985). Our strategy focuses on long GBPUSD positions, targeting strong momentum that could push GBPUSD to 1.41 and then 1.43. If the downtrend continues, the key support target is 1.35-1.36.

 

■ George Protonotarios, Financial Analyst

Free Forex Trading Signals: EURUSD, GBPUSD

TradingCenter (March, 1st 2016)