30 minutes till 4hr candle expiry. Looking like it may go up. Spinning top candle of indecision at a key resistance level. 1 hour chart shows strong bullish candle with a strong long wick candle next to it. I’m going long. stop loss 1.53091 I think she might break far north.
My BUY LIMIT order at 1.5308 wasn’t triggered yesterday as GBP found support in the area I had highlighted between 1.5352 -1.5308 at 1.5332.
The BULL strength was surprising as it was sufficient to take it all the way to a second assault on WR1 something I mentioned last week.
Inevitably this attempt to take out WR1 failed as overbought conditions weakened the BULLS sufficiently for the BEARS to step in at 1.5473 and send the price south.
So far the BULLS have halted the BEARS at 1.5428 and now the position is unclear.
In 15 minutes we have the start of the BOE Inflation Report Hearing. This will be a key event so no trades should be placed until we hear what is said as this could set GBP’s direction for the rest of the week.
For now we wait.
The Inflation Report under card event came and went without much impact so now we wait for the main event at 15:00, Fed Chair Yellens testimony.
Opinion seems mixed as to what to expect. The majority of pundits are expecting to hear the word “patience” somewhere in the speech.
This is code for no immediate action and the chance of a June rate hike recedes.
Some commentators are anticipating a more BULLISH statement which will excite the USD BULLS and GBP/USD will fall.
GBP/USD has sold off in the last 3 hours and now sits at 1.5420. 1.5394 is a possible target where the Weekly Pivot meets the 200 sma.
I’m still looking for LONGS but will wait to see what 15:00 brings before I act.
FED Chair Yellen said little yesterday but sometimes that’s all it takes.
Bank Governors and FED Chairs speak in code. Words like care, caution, patience may say little but they mean a lot. There were no crumbs of comfort for USD BULLS and the net effect of Yellen’s speech was to weaken the USD across the board.
GBP/USD initially popped down just after the release of the speech but then found support at the 200 sma and there was no stopping it afterwards.
I was SHORT GBP/CAD and GBP/AUD so I wasn’t trading G/U but there were some good opportunities to go LONG.
The key level that I’ve been mentioning all this week and last was WR1.
Every time a key level is tested it weakens it. The first test last Wednesday was repelled by the BEARS but it was a sign of things to come. Monday saw the level tested several times each time being sent back and Tuesday we saw the level tested a further 2 times.
It was only a matter of time before this level broke and that happened at midnight last night when the BEARS gave up and the BULLS took full control of the pair.
GBP has now broken all key resistance and we are left looking for where this BULL run from 23rd January may end - if indeed it does end as there is no sign it will end any day soon.
1.5600 to 1.5619 is the next area I see that may be targeted by GBP BULLS.
However, this area is for the future and its inevitable that we see GBP retreat from the heights to alleviate overbought conditions on several time frames.
How far we retrace is open to question.
A pullback to 1.5472 WR1 would present a chance to go LONG but until we see where GBP heads after 10:00 the situation is unclear.
At 10:00 BOE Governor Carney speaks. All bets are off until we know what he has to say.
At 15:00 FED Chair Yellen testifies though were not likely to hear much new here.
At 16:30 ECB President Draghi is in the chair. This is unlikely to impact GBP/USD.
Its sitting on hands time for the next hour.
No fireworks from Carney at 10:00 so we have Yellen and US New Home Sales at 15:00 to keep our eye on.
The 12:00 4H candle is a reversal doji which suggests we’re still headed lower.
As mentioned 1.5472 may present an opportunity to get LONG but the charts look unconvincing and we may be headed for 1.5420 area.
I remain a BULL in this market although I have no positions from these levels.
Standing on the side lines is advised for now.
Yesterday I pointed out a doji reversal candle on the H4 chart and said I was looking at 1.5472 to go LONG.
Price reversed to 1.5467 so I placed a small LONG from 1.5480 though I wasn’t convinced by the price action.
Price eventually made it past yesterdays high at 1.5537 which is where I placed my STOP overnight.
The Asian session saw its customary GBP sell off so this position was closed by the morning.
I’d like to go LONG from these levels (1.5530) as 1.5515 looks fairly supportive and the USD is weakening across the board.
13:00 sees a busy time for news with CPI, Core CPI and Unemployment Claims.
Its probably worth trying to get long near here as if the CPI misses, which is a possibility, then USD could fall sharply and as I type this we’ve just pushed past 1.5530 so I’m LONG from 1.5532 with a STOP under todays open at 1.5525.
I remain GBP BULLISH as the fundamentals all favour more GBP strength.
I believe we are headed for 1.6000.
Yesterday I suggested the CPI numbers out of the US may miss based on recent mixed US data and although the Core CPI m/m numbers missed the key Core CPI exceeded target (0.1% expected 0.2% actual).
This print immediately opened up the possibility of a June rate hike and the dollar BULLS steamed in.
GBP/USD that was retracing from overbought conditions was swamped and the price was quickly driven down to the Weekly Pivot where the decline was arrested but all the ground recovered from there was lost overnight during the Asian session and price fell to 1.5385.
The Weekly Pivot has been key to GBP’s fortunes acting as resistance and support. Currently the price is being held above WP so its a decent opportunity to go LONG so I’m back in at 1.5395 with an ultra tight STOP at 1.5380. This represents a 15 pip risk to potentially a significant reward if GBP can resume its upward direction as suggested by the technicals.
At 13:30 we have the US Prelim GDP numbers. The Prelim GDP isn’t generally as significant as the Advanced GDP so its impact is uncertain (Advanced GDP missed). However the markets are particularly sensitive because of the impending rate hike so literally anything could happen so caution should be observed.
If I can get my LONG to b/e before 13:30 and the GDP news misses this trade may make progress but, as ever, the fundamentals outweigh the technicals and GBP’s direction remains uncertain and at the mercy of news.
I’ve moved the STOP on my LONG GBP/USD trade to 1.5426 which is just under the 200 sma on the H1 chart locking in 31+ pips.
GBP has recovered better than I expected and is looking quite BULLISH.
If the US Prelim GDP numbers miss at 13:30 this trade could be good to hold over the weekend.
Manufacturing PMI came in better than target (53.5 exp 54.1 act) and this has helped boost GBP BULLS.
WR1 resistance was too much for GBP BULLS last Wednesday and Thursday combined with the unexpected Core CPI print out of the US that gave heart to USD BULLS that a rate increase was back on the table for June.
I remain BULLISH in this market though this could be a pivotal week for G/U. Construction PMI followed by Carney at 10:00 tomorrow culminating in the excitement of the Unemployment Rate and Non-Farm Employment Change numbers on Friday
I shan’t enter this market until we break 1.5430.
If we get a break and hold above this level I shall be looking for LONGS.
Monday’s better than expected Manufacturing PMI numbers weren’t sufficient enough to wrest control of G/U from the BEARS who drove the price down to 1.5350 before the BULLS found any support.
It appears from the H4 charts that GBP may be headed to the lower side of the channel described above in an area anywhere between 1.5300 and 1.5340.
What strengthens this analysis is the 23.6 MTF Fibonacci and WS1 and Monthly Pivot support in the same area.
Todays Construction PMI numbers although better than expected haven’t so far helped GBP BULLS another clue that we may be headed lower.
The BOE’s Gov Carney speaks at 10:00 so this analysis may be compromised by what he has to say so the waters are very muddy currently.
Waiting until post Carney conference is the obvious move so for the time being we sit tight and see where we are at sometime after 10:00.
Yesterday I highlighted an area on the H4 chart that I thought GBP/USD may be headed for.
We can narrow this area down today on the H1 chart following the Services PMI numbers which missed.
1.5300 should be the extent of any GBP/USD pullback. Should price not hold here we may be looking at a more serious decline in GBP’s fortunes.
More likely though the area 1.5300 - 1.5325 will provide the support GBP BULLS are looking for.
This area is heavy with formidable support. Lower trendline, WS1 Pivot, Monthly Pivot and 23.6 Monthly Fib all lie in this area. If GBP doesn’t bounce from here its headed for 1.5260.
I still favour LONG positions from here and as I send this the 15m candle has formed a perfect reversal doji so we may be bouncing from 1.5325 but my gut feeling is we may go a bit lower yet.
The key to any LONG positions will be a break and hold above the 200 sma on the M1 time frame.
For now we wait.
GBP/USD looks as if it has found the support it was looking for at 1.5325. The BEARS have had 2 attempts to push the price lower than 1.5325 and failed both times.
The price has now crossed over the 200 sma on the M1 chart and is holding above it.
I’m LONG at 1.5341 with a STOP below the lows at 1.5320.
AT the end of January I suggested that the 1.4951 low may be a turning point in GBP/USD’s fortunes and it was possible that we could be seeing a period of GBP strength. Since then I have only been looking for LONG positions on G/U.
Yesterday, however the break of the support I discussed in Wednesday’s post now suggests that this BULL run may have come to an end and we could be headed back to test the 1.4951 lows.
The 200 day moving average on the H4 chart has been broken and has turned resistance. Above that are the 23.6 Monthly Fib, the 61.8 H4 Fib, plus 2 pivot levels.
These are formidable obstacles now in the way of GBP BULLS.
That said GBP/USD is now oversold on H4 time frame and is moving out of OS on H1.
G/U BEARS will need to revisit 1.5223 and a break of that level will open the door for further GBP weakness.
Muddying these waters are the 12:00 Official Bank Rate and any accompanying MPC Statement, 13:30 Unemployment Claims and of course tomorrows US Non-Farm numbers and Unemployment Rate.
This is a market fraught with danger and I’m staying on the side lines until we hear the NFP numbers.
1.5223 looks key. If this breaks and the 1.5180 fib level beneath it breaks, we could be seeing GBP resume its decline from 1.7190.
If however 1.5223 holds (or 1.5180 holds if 1.5223 breaks) then this would be a very bullish sign for GBP/USD and we could be headed for much higher ground.
GBP continues to sell off taking out WS1 and WS2 support and now approaches the 38.2 Fib on the H4 charts.
It would appear that the markets are anticipating the key NFP numbers due at 13:30 to beat target and a June US rate hike will be back on the table.
I remain on the side lines until 13:30 where a green number print of the Non-Farm Employment Change could see GBP accelerate to previous low at 1.4950.
We are however becoming increasingly extended on H4 and H1 and M30 and M15 so a bounce from 1.5180 cannot be ruled out though its not tradeable whilst we await 13:30.
More after 13:30.
The Non-Farm Employment Change beat expectation by a substantial 55k and the Unemployment Rate was .1% better than expected at 5.5%
Naturally this has crushed all dollar BEAR positions.
GBP is currently stablizing from its low of 1.5116 but more downward pressure is possible.
Oversold conditions mean its almost inevitable we see some sideways price action but its unclear how long this will go on for or whether we’ll see another push down.
Its inadvisable to trade when markets are absorbing and reflecting on the impact of data as significant as the NFP numbers.
Friday afternoon is never a good time to place trades so my advice is to switch off and wait until the dust settles over the weekend.
The starting point for any analysis should always be the Monthly Chart. On this chart you should place as many legitimate trendlines as you can find. Legitimate being defined as having 3 or more touches.
Placing Fibonacci between the chart high at 2.11152 and low at 1.3501 should also be placed (not shown in this chart for clarity).
Once these have been placed the chart should be saved as GBPUSD.tpl.
A look at this chart on the Daily time frame now reveals the bigger picture.
The recent GBP sell off from 1.5557 reversed at 1.4950. The question is has that down move resumed in the wake of last weeks sell off accelerated by the strong NFP numbers or are we still headed higher.
The trendlines suggest the latter and this would be supported by the Daily RSI which continues to move north.
1.4950 remains key. As long as this level remains intact I shall continue to look for LONGS on GBP/USD.
All of yesterdays GBP/USD’s steady gains were wiped out overnight during the Asian session and Cable had no friends at the start of London trading as we sold off to below yesterdays open.
There’s no news of any meaningful significance due today but BOE Gov. Carney speaks at 14:35 so traders will have to be wary in case the markets react to what he has to say.
I’m still looking to go LONG in this market and may try a trade once we get a break and hold past the 200 sma on the M1 chart which is currently at 1.5068.
There are a number of BULLISH signals just appearing on the charts so LONG at 1.5070 with a hard STOP under the higher low on the M1 at 1.5040 might work out.
USD is weakening against JPY, CAD, CHF and AUD so this trade may develop but it will need to be watched if the price drops below 1.5070 in case I need to exit.
This mornings Manufacturing Production numbers missed wildly with a print of -0.5% against expected 0.1% but GBP/USD has largely ignored the numbers.
My LONG from 1.5070 now has a STOP at 1.5024 for a 46 pip risk as the support at 1.5028 looks reasonably solid.
Its all a bit indecisive though to be honest. GBP hasn’t really gone anywhere this week and its difficult to see where we go next.
I remain BULLISH above 1.4950 and the RSI’s are favourable so we may see GBP advance from here in the absence of further news but we really need to see 1.5100 before we can say anything with much certainty.
Over the last 3 hours GBP has been on the move and its direction is down.
The price is fast approaching a critical area at 1.4950 previous low and 1.4972 trendline support.
If these 2 levels go and the all important WS1 pivot at 1.4915 then GBP will be headed for 1.4813 July 2013 low and under that there’s not much to stop it heading for 1.4228 May 2010 low.
The next few hours could be critical for GBP/USD.
Having jockeyed for position over the previous 2 days the BEARS made their charge and drove GBP/USD to and past key levels.
I had marked 3 key areas on my charts. 1.4972 trendline support which was ignored, 1.4950 previous low that was easily defeated and finally the key WS1 level at 1.4915.
If BUYERS of GBP/USD were waiting anywhere they would be at or just below this level and so far this has turned out to be the case.
WS1 has held firm and GBP is currently 80 pips above this level.
The big question is how long will this rally continue?
I’m LONG from 1.4920 with a STOP now at 1.4930 so I’m +10.
We have highly significant news out of the US at 12:30 with Core Retail Sales, Retail Sales and Unemployment Claims and following that Gov. Carney is on his feet at 12:45.
Its hard to get away from the notion that the USD has strengthened too much and too quickly and we are due a meaningful pullback. The EURO in particular has been severely battered and is oversold on all the higher time frames.
Currently the USD is weakening. I think this will continue until we get to 12:30.
1.4893 is now key to GBP/USD fortunes. If this level is still in tact after Carney then we may see continued USD weakness which means further GBP strength.