With the recent lower high printed earlier this month, the GBP is showing signs of weakness under the 6800 handle. The nearly 600 point rally which kicked off 2/6 and printed 7 contiguous days of gains against the greenback, now appears to have lost steam after correcting about 1/4 into the gains.
Intraday, a clear zone has been established b/w 1.66 - 1.6620 which held as previous technical resistance, and now serves are an area of buying interest. However, we’re now seeing a bearish breakout structure as sellers have been able to print 3 consecutive lower highs (via the H4 chart) this month. This should leave one to ask where the buy orders are stacked? If buyers aren’t able to make ground since the recent swing (now seeing the lower high on the D1 chart), then where would they most likely be interested in buying again?
Given the technical structure, and the lack of buying interest, we feel the GBP may see continued downward pressure as buyers may concede the 1.66 level and await a deeper retracement. Taking a short in hopes of catching the 1.66 breakout is a bit aggressive - so you can either take the breakout, or, enter on a pullback into that demand zone which should act as supply. Initial targets would be just above 1.65.
yes i would done it this time , and have done it 1000 times before …
My sl would be very little in case of pb like you seen here …
Different between a good trader and a bad trader is the abiliy to trade you out of bad situation like this one …
My entry would be very close top of the spike ( 30 sec before my post ) seen from 5 min candel …
Market is in range and trying to find the border so i would secure my first short with one
My initial fill was @ 1.6636 - 54pts positive right now (1st green box)
Second order was filled @ 1.6572 - 12pts negative right now (2nd green box)
I’m net 42pts positive.
The second entry was a bit aggressive, because I felt that pullback to prior technical support would have held. However, the market traced a bit deeper, and 6591 is holding right now.
I’ve eliminated all risk though. Stop is trailed down about 35 points from my 1st position.
Pending long GU order @ 1.6555 with a 65 pip stop.
One of the great things about trading is there’s always a different point of view. So here’s another take on the GU price action. LOL!
I always like to look toward the higher time frame charts. For example, if trading the daily chart, I’m also paying a lot of attention to what’s been happening on the weekly and monthly charts.
So if I throw up the monthly GU chart, from my point of view, I’m thinking GU might be at a sweet level to be going long for a good run back up to previous weekly and monthly levels.
Price doesn’t move in one direction, so after the very strong bullish Feb-2014 candle, price is going to want to re-trace and backfill, right?
Dec-2013’s high was @ 1.6578-ish, the 50% re-tracement on the Feb candle is 1.6535-ish, so I split the difference. Also, notice how the Dec-2013 monthly candle reacted off the high of the Oct-2013 candle, similar price pattern.
Not to mention lots of red flag events tomorrow, UK Bank-rate, UK unemployment, FOMC Statement, etc.
Nice entry D-pip. I took the entry off the S2 weekly Fibonacci pivot (1.6543). I was in a little later… 1.6568 and looking for a partial close at the monthly pivot 1.6600.
Hi there d-pip - thanks for taking the time to read through the thread and commenting!
I agree with your commentary on trading strategy (i.e. looking to higher TFs)
However, I strongly disagree with your bullish bias.
That snip of the chart you posted is quite interesting though, and there is a pattern forming (Bull candle, 50%-ish bear retracement the next month, then larger bull candle up).
Just as you state you like to look to higher TFs for context, it’s just as important to break a Monthly candle down via the D1/W1 to understand what’s happening (I’m 100% certain you know this and it goes without saying, but, it may not be common knowledge to the novice reading through this).
The GBP has indeed put on an impressive run, but there were a few queues that I found which lead me to personally believe this run is over, and a deeper correction is due.
First is my daily chart analysis from my original post.
Secondly, there is a key candlestick on the W1 (2/8/2014).
Normally, I wouldn’t single out a lone candle and try to surmise what’s happening, but given the timescale, where it formed, and how it formed, I feel that many will get trapped buying into this pair right now.
I only bust out FIBS on weekly and monthly timeframes.
-This single candle was nearly 400 points high
-It is is the largest single bullish weekly candle in years
-It formed right under 1.68 - 1.68 is a major FIB (50), a psychological number, and very clear technical resistance
-It formed @ the peak of an strong bull run
To me, when I factor in all of the aforementioned, I find it hard to maintain a bullish bias for the pair.
Now, there is indeed a bullish breakout structure present on that Monthly.
But, if we’re going to see another leg up, the pair will need to break above 1.68 w/ conviction and then retest it to cement in the base.
And, we both know, monthly charts move very slow - so, that may take a while to pan out.
I’m not married to either side - I’m just analyzing what I see, and what I see is hesitation to get out and above that major technical level. Bottom line - buyers beware.
Of all five call I had I would have had one loss - 17 pips …
So 80 % right is not bad .
If you take the whole day , 17 trade 1 miss so I would call it a particularly successful day …
My last call was a mind impatient I should expect / know that the price will test 166 before the market took a wild ride south .
My entry would be around 16597 in comparison to my S / D line
I also expected that the market would go over the range instead of a slow nasty trend that can sometimes be impossible to understand even though I should have understood it …
So my bias was wrong there … and I should have understood that final push down as I broadcast
was turning point and the market would test the North …
However thing is even i have wrong bias should i trade in such a way that i position my self so i gets a small profit …
My philosophy is that the way to a millon $ goes through a million trade …
It means I’m short of 16633 target 16620 target was 1 …target 2 I do not know , hoping that the price goes more south anyway , I have a free ride while it lasts
So here’s another take on the GU price action. LOL!
