My GBP/USD LONG from 1.6213 is approaching an area of strong resistance. I’d like to hold this position into the Scottish Referendum but 1.6338 may prove too tough a barrier for GBP BULLS. The story is further complicated by a raft of numbers out shortly (Average Earnings, Claimant Count and MPC votes).
I think I’ll tighten the STOPS on this trade to 1.6280 (61.8 fib) or higher and see if the news is BULLISH.
GBP/USD LONG
STOPS moved to 1.6302 (+89)
Many times trading Forex you just can’t win. The numbers released at 09:30 ALL beat expectation and this should have boosted GBP BULLS, instead it sold off.
The only explanation for this has to be the Bank Rate Voting which I can only assume the markets were hoping for a another dove to leave and join the hawks. It seems a bit churlish that that was enough to weaken the GBP but there you have it and my STOP has been hit.
I’ll be looking to re-enter this market LONG possibly in the 1.6281 area if we get there. If the price doesn’t get that far then if the BULLS can clear resistance at 1.6338 and return to it and test it for support , i’ll look to BUY.
Over the last year, the run up to the mid-July high was full of peaks that were 700-900 pips above the 200-day moving average. Now that the price has fallen below the 200-day moving average, we are in a bearish situation. The price is only 530 pips below the 200-day moving average. I am only taking shorts so long as we are below that average. I am set to go short at a break below the current 3-day low of 1.6160. With that, I will groom my stop win-or-lose along the 3-day high till it is hit. If we get a long move lower I will stop grooming along the 3-day high when the 7-day high passes into profitable territory and follow it win-or-lose until it is hit.
It appears as if GBP BULLS are making another assault on the 1.6338 area.
The 61.8 fib has been cleared at 1.633.88 and the MA’s are widening as anticipated.
If the BULLS can clear 1.6338 and subsequently defend it I’ll go LONG with a STOP below 1.6338 in the 1.6330 area.
The last opinion poll on the Scottish Referendum gave the NO camp a healthy lead.
Price action suggested that the 1.6338 barrier would be overwhelmed by the BULLS so I went LONG at 1.6335 with a 12 pip STOP.
The news at 13:30 hasn’t hurt the GBP/USD so I expect this pair to head north for the foreseeable future.
Increasingly a NO vote is being priced into the market so when the result comes tomorrow morning I don’t expect a major move (unless its a YES vote).
There’s no reason why GBP/USD can’t recover 1.70 from this position.
1.6400 looks like a new resistance area that GBP BULLS will need to get past to make progress.
The price is currently held in an 80 pip range between former resistance now support 1.6339 and the 1.6400 handle.
I’m still LONG from 1.6335 with a STOP at 1.6338 (+3).
Price may meander between these 2 levels unless we hear any rumours or news.
If the trade is still alive by 7:00 tomorrow, the inevitable NO vote should send GBP past 1.6400 and towards higher ground.
Where next for GBP/USD?
My GBP/USD LONG from yesterday netted me 87 pips before profit takers took the price down to my STOP.
There is nothing to suggest that GBP won’t advance north again and this pull back is a good opportunity to go LONG.
An obvious place is the previous resistance turned support at 1.6340 area.
I’m LONG from 1.6346 with A STOP under all the support at 1.6314 for a 32 pip risk.
I’ll move this STOP once the 50 sma on the 5m chart has been cleared.
(please ignore the image below - this appears to be a bug in the image uploader)
Good trade for today, thank you.
Just a quick heads up on GBP/USD.
GBP has weakened considerably since making highs at 1.6523.
My LONG from support at 1.6340 has hit my STOP at 1.6314.
I was tempted to move this STOP down to 1.6280 but decided against risking 60 pips.
The 1.6286 area is interesting as this is a double fib meeting point. Its the 50.0 fib on the Hourly chart and the 61.8 fib on the Daily chart. Its also a known area of support/resistance.
I strongly suspect we are headed for this area but as we approach the close of play trading will probably slow.
If we get there before the close and the price doesn’t break 1.6286 then it may be worth getting LONG with a 15 pip STOP.
There’s a good chance GBP will open higher when we open for trading as traders digest the consequences of the No vote and thoughts return to the question of the BOE raising interest rates.
http://i62.tinypic.com/20s9m5z.jpg
Where next for GBP/USD this week?
In my last post I suggested GBP/USD might bounce from the double fib at 1.6282 which it did and I can see no reason why GBP shouldn’t head north to 1.6500 resistance.
Its a very light news week as far as direct GBP news is concerned though we have New Home Sales out of the US on Wednesday and Durable Goods and Unemployment news Thursday which will influence the pair but is unlikely to be a game changer.
1.6498-1.6523 is all resistance so if GBP makes it this far north I’ll plan my trades accordingly.
I’m currently LONG GBP/USD from 1.6299 with a b/e STOP.
More on my website.
(For a full screenshot http://i57.tinypic.com/21ahbbt.jpg)
Over the Asian session GBP was bid but it sold off on the London open. Since then GBP/USD has rallied and strengthened.
MY LONG from 1.6299 now has a b/e STOP which I shall adjust once certain ma’s have been cleared.
The 76.4 fib comes in at 1.6412 which may hold up the BULLS temporarily but I don’t expect this level to present too much of a hurdle.
In the absence of news my 1.6500 initial target looks attainable.
(For full size go here http://i60.tinypic.com/ve3nth.jpg)
The 76.4 resistance at 1.6412 proved more testing for the BULLS than I expected and we got a 60+ pip retrace.
This is not a problem as long as the support beneath holds. In this case the double support of the 1 hour 50 and 100 sma and beneath that a strong trendline and the 1 hour 200 sma.
Its unlikely looking at the chart that the BEARS will be able to break down all this support so I’m still confident we are headed for 1.6500 from where we are now at 1.6364.
This trade (LONG from 1.6299) has a break even stop which will be moved up below the 200 day sma as it rises.
(here for large size http://i62.tinypic.com/a0aus4.jpg)
Well the 76.4 fib has sent the BULLS packing again but only as far as the ever climbing 100 day sma.
The area in the square could see some intense action as price is squeezed between the BEARS waiting at the 76.4 fib and the BULLS driving up the 100 sma and 50 sma.
I still expect the BULLS to win this battle and if they break 1.6414 then 1.6453 is the next resistance area. Clearing 1.6453 opens up the primary target of 1.6400.
My LONG from 1.6299 now has a STOP at 1.6340 (+41)
(for large size image go here http://i62.tinypic.com/1g11q8.jpg
There are many “professional” traders who offer expensive teaching courses yet steadfastly refuse to prove they make a profit trading forex by opening their books to examination through myfxbook for example.
Some of these traders claim never to look at a smaller time frame than the 4hours chart and boast that they generally trade off the 1 day chart with no indicators relying purely on “price action” to determine a possible trade.
This is nonsense.
There are certain indicators that are ESSENTIAL on every chart and price action is completely invisible on time frames greater than 1 hour.
True price action can only be seen on the 1 minute chart and I shall explain why this at another time.
Currently the BULLS and the BEARS are at war on GBP/USD.
This war will shortly intensify. No-one knows when. Its possible this will happen at 15:00 when US New Home Sales come but if it doesn’t then its likely to be later this evening or tomorrow morning.
Hopefully it will be this evening and I shall do a video explaining whats happening but for now I give some general pointers.
The 1hour chart above clearly shows the battle between the Bulls and the BEARS.
The 76.4 resistance at 1.6413 has been tested 4 times and on each occasion the BULLS have been repulsed. Every time this happens the line weakens.
The 100 SMA is supporting the BULL charge. Beneath the 100 sma is more support for the BULLS so the BEARS are in trouble.
The BULLS are likely to break this fib resistance at some time in the near future. If it doesn’t happen at 15:00 at we get a USD favourable print then the BULLS may have to retreat to regroup but eventually I expect 1.6413 to give way.
When it does we could see a spike up as the BEARS defenses collapse and they retreat to 1.6453
Over the space of 24 hours the 76.4 fib at 1.6412 was attacked 6 times by the BULLS and on each occasion the BEARS failed to make new lows in response. In normal conditions this would be a sign that the BULLS are in control and will try again to take this level out.
( Expanded view - http://i57.tinypic.com/281h0xv.jpg)
News, however, will frequently change the mood.
A combination of an unscheduled statement on the state of the UK’s public finances and the USD New Home Sales beating expectation by some margin was enough for the BULLS to leave the market leaving the BEARS in control and the price has been driven through all support and currently sits back at the double fib area at 1.6285 area.
As London will frequently reverse the losses suffered by GBP/USD during the Asian session there’s enough support down here to risk a LONG GBP/USD with a tight STOP so I’m in at 1.6291 with a 20 pip STOP.
The 4H 100 sma has been significant recently for GBP/USD and we are sat on top of that line now and it appears to be leveling.
I’m not 100% on this trade as GBP appears to be at the mercy of even mildly dovish news but its worth 20 pips.
(Extended view - http://i61.tinypic.com/2yxen8m.jpg)
As can be seen GBP/USD is bouncing about off the 76.4 Fibonacci and the 50.0 Fibonacci on the Hourly time frame (also the 61.8 Fib on the DTF).
The 100 sma on the 4HTF comes in at 1.6282 offering further support for the BULLS.
I’m still LONG from 1.6291 with a STOP at 1.6271. The 50 100 and 200 sma’s all now sit above the price and this will force downward pressure on the BULLS. The 61.8 Fib on the HTF comes in at 1.6341 further helping the BEARS.
USD Final GDP comes out at 13:30 GMT. This is likely to meet the 4.6% target so we may see GBP/USD drift between 1.6284 and 1.6409 until theses targets are met. A break of either will possibly set GBP/USD direction for the foreseeable future unless we get some weekend market moving news.
(Expanded view http://i58.tinypic.com/2mwzc6v.jpg)
Well, after bouncing off the Fibs at 1.6409 and 1.6284 the BEARS won out in the end and forced the break south.
Its clear from this move that all the positive impetus gained from the Scottish NO vote has left the market and GBP has resumed its decline but I suspect this may not be for long.
The most likely area GBP/USD is headed over the next 24 hours is 1.6160 ( 1.6238 at time of writing).
This is a very strong triple support area (WS1, 23.6 Fibonacci, September 16 low).
Harmonic theory would suggest that the flock will target this area and we can expect to see a significant bounce if 1.6160 is reached.
1.6232 may offer some support for GBP/USD LONGS but if this level fails then it may be possible to SHORT GBP/USD from 1.6230 with a 1.6250 STOP.
I shall watch the 1m chart over the next half hour in the absence of news and look to SHORT GBP/USD.
No particularly significant direct GBP news out in the first part of this week apart from Current Account at 09:30 GMT Tuesday but the PMI numbers are due Wednesday Thursday & Friday and of course the big one on Friday - Non-Farm Employment Change and Unemployment Rate which could set GBP’s direction for the foreseeable future.
More on these events in due course.
(expanded view http://i61.tinypic.com/303d2eb.jpg)
Fairly quiet action yesterday on GBP/USD and no trades.
In 20 minutes the quarterly Current Account numbers are printed. This is the difference in value between imported and exported goods. The print is expected to be -16.9B but its far more likely to be red numbers (missed target) than green numbers (exceed target) . Its difficult to say how much this print will affect GBP unless its a huge miss. My guess would be meet target or a narrow miss.
My favoured target remains 1.6161 where I’ll be looking to get LONG.
Price is 1.6264 currently so its unlikely to get to this area any time soon unless Current Account misses by miles.
The upside target of 1.6366 is equally distant and there’s nothing to suggest the BULLS can break through all the resistance ahead of them so unless Current Account changes the mood we may see GBP/USD consolidate for a few hours.
At 15:00 US Consumer Confidence needs to be watched.
(Extended view http://i61.tinypic.com/2ymhnxc.jpg)
GBP has worked its way down to the 1.6160-1.6170 area that we are looking for a reversal. There is strong support here.
If price doesn’t bounce here and this level breaks we’re looking at 1.6020 for the next support.