GBP Implied Volatility Spikes Ahead Of Meaningful Vote
Matt Simpson March 12, 2019 1:16 AM
Although Theresa May has secured ‘legally binding’ assurances from the EU ahead of today’s meaningful vote, implied volatility isn’t suggesting it will be a pleasant session.
This all sounds great, but it must pass through parliament first and implied volatility isn’t suggesting it will be a pleasant session. In fact, implied volatility for GBP/CHF is pricing in a 1.8% move over the next 24 hours, in either direction, which is essentially a 3-standard deviation day. So it’s also worth remembering that higher volatility doesn’t always lead to a clean, directional break and can instead invoke whipsawed price action.
Still, if we can ride out the noise, and key levels hold then GBP/CHF is one to watch from a technical standpoint. Among GBP crosses, GBP/CHF is the strongest performer year-to date as it continues to develop its developing bullish structure. Two prominent, higher lows have formed since January’s flash-crash and the move is bobbing nicely along the 20-day eMA. Furthermore, yesterday’s bullish engulfing candle has respected the neckline from February’s breakout to carved out a prominent low.
It could be argued that the 1.3062 low could mark a clear line in the sane for bulls and bears following the vote. If the key level remains unchallenged, GBP/CHF shows potential to extend it bullish trend and head towards the 1.38 highs. The key here though is to wait for prices to consolidate above key support levels to avoid jumping into an extended move. However, a break beneath 1.3062 invalidates both the structural low and neckline support and takes it back within range.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.