Public trading strategy
UK Prime Minister resigns — short the British Pound on political chaos
Thesis
Sudden leadership changes in major economies create political uncertainty, which usually makes foreign investors pull their money out. The British Pound is already weakening on the news, and a strategy betting against the currency could capture further downside as the markets process the messy transition.
Strategy approach
Create a momentum strategy on FXB (CurrencyShares British Pound Sterling Trust) on the 4-hour timeframe. Enter a short position when the 12-period EMA crosses below the 26-period EMA. Target a 2% downside move and set a 1.5% stop loss.
Markets and timeframes
FXBH4