'GBPUSD could collapse, crucial levels at 1.4225 and 1.4050' - Nenad Kerkez, Admiral Markets

NENAD KERKEZ
PROFILE
• Current Job: Analyst and Full Time Trader at Admiral Markets
• Career: Holds a MSc Degree in Economics at the John Naisbitt University (formerly known as Megatrend). Works as Senior lecturer and market analyst for Admiral Markets

View profile at FXStreet

Nenad Kerkez is an analyst and trader who has been in the market since 2008 and works closely with Admiral Markets as their Head Lecturer and Market Analyst. He is well known in the FX Community, ranking in the top 10 traders and analysts in the Forex Factory High Impact Members Ranking.

Nenad covers over 25 currencies on an intraday basis and has a Masters in economics. He also developed CAMMACD TM, a proprietary trading and analysis strategy. Further, he is the co-founder and head of Elite Currensea Trading, an educational website for currency traders.

Do you think a big collapse in the GBPUSD is coming in the first part of this year? Which are the key levels in the cable?

Yes, it could be. UK is mainly a Services economy, about 78% of GDP is Sevices ...agriculture, services production, clothes etc..they manufacture for export. FTSE has a large amount of Natural Resources and Services companies in that listed exchange and GBP would be heavily influenced by the capital flows from the financing hub of London . If London's Banking district experienced a real financial crisis, then the UK could be in a prolong recession for many years to come, in other words, services and finance is the major industry of the UK. Additionally, if UK leaves EU, it can’t pay tax to UK as a country of its own and there might be a re-location of some major banks too. Technically, we should be paying attention to MONTHLY chart on GBPUSD. Monthly chart shows a bearish flag so crucial levels are 1.4225, 1.4050. If 1.4050 fails the way to 1.3650 is open. To the upside 1.5510 is very important. If it breaks 1.5926 is again in the game.

The US dollar is losing its mojo against the Japanese Yen, do you see the USDJPY breaking August lows of 116.00?

Could happen in a month or two. Yen is gaining strength mostly by China worries and we could see Yen as a safe heaven again.

AUD/USD broke below the 0.6900 to lows since 2009; why this happened and what are the levels to pay attention from now onwards?

AUDUSD has continued down the path of a downtrend as the Commodities prices of Australia’s key exports have dropped the past couple of years. This includes, hard commodities prices such as Iron Ore, Bauxite and Copper, which have all been declining as China has slowed its rate of construction investments. In addition, the price of key Energy exports such as Coal and LNG (with LNG linked to the Oil price), have also been largely effected to the downside. I would be looking to short rallies of the AUDUSD pair, with a potential drop to 0.65.

Which are the currency pairs that can profit the most from the chinese turmoil?

Well you would expect that the currencies of the nations that export heavily to China to be effected most, and this would be CLP and AUD, as their exports in Hard Commodities and Energy have been effected the most. Currencies that are strengthening in this environment are USD and JPY, with the former due to tightening of monetary policy and the latter because it being a safe-haven currency. So shorting the rallies of AUDUSD, AUDJPY, CLPUSD and CLPJPY would be most profitable.

Where do you expect oil prices to find a bottom?

Iran Sanctions have been lifted, and this means that an additional 500Mn/Bbl’s per day will be added to Oil Supply. I expect the recent decline in the Oil price to have reflected this increase in Oil Supply. Personally, I think we are near the bottom of the Oil price, whereby we may have occasional dips below USD30/Bbl, but as a whole, I see this price holding reasonably firm for the interim. For further information on the Oil price and its market, refer to this link.

What are the most important events to be followed in the week ahead?

US Inflation figures (THU), UK Employment (WED), Chinese quarterly GDP (TUE), CAD overnight rate (WED) and ECB Press conference (THU).
I should focus on Chinese data as it is the most important out of all most important data this week. Don’t forget that China is the second large consumer of oil.