There was a glimmer of hope out there for the EU when it came to Brexit. The United Kingdom’s new Prime Minister, Theresa May was not in the Brexit camp before the referendum. Those hopes were all but extinguished when a Downing Street spokeswoman said this morning that Brexit is the Prime Minister’s “top priority”. The British Pound reacted how you would think it would, it tanked. What is very interesting and significant is that it could not take out the post-Brexit lows. Take a look at the FXB chart:
The line held at that 125.80 area. This is a classic, sell the rumor, buy the fact. The news is out, the support held, the next logical step is for something bullish to come out. We just need to time this correctly. If we give ourselves a bit more than a month, this should be enough time. With the proper return on risk, this signal can work out really well for us.
Our signal is:
Based on our methodology, a signal has been generated:
Buy (opening) the September regular expiration FXB 127 strike call
Sell (opening) the September regular expiration FXB 129 strike call
For a DEBIT of $0.45 or less.
This signal is not GTC, is a DAY ORDER ONLY and is valid with FXB $125.50 or greater.
This affords us a reward to risk ratio of 3.44:1 ((1.50-0.45)/.45). The max risk is our initial debit ($45.00 per one lot) with a potential max return of $105.00.
