The key 1.4634 has broken and GBP is attempting to break the 1.4600 handle.
Relentless dollar strength is crushing all pairs regardless of the oversold or overbought conditions with the GBP and EURO particularly hard hit.
Jumping on board this sell off carries risk as any retrace when it eventually comes could go quite far.
Best to wait for the pullback and enter SHORT.
For now stand aside.
GBP moves ever lower weighed down by weak manufacturing numbers, election uncertainties and hawkish FOMC statements.
With the RSI moving out of oversold on the H1 time frame (and other time frames) a pullback is always on the cards so waiting is advised.
Its a very thin news day so unless we get a move back higher to SHORT (1.4637 area would be a good target)
its probably better wait to see what the CPI numbers bring tomorrow.
The raft of unfavorable CPI numbers did the GBP no favours this morning and GBP continued its overnight sell after yesterdays modest recovery.
Currently GBP has arrested the decline south and is heading back north again. How far this move gets remains uncertain though a break of yesterdays high at 1.4681 would suggest GBP could be headed higher and 1.4735 Weekly Pivot could be a realistic target.
The RSI is showing BULLISH momentum so I prefer to be LONG in this market than SHORT but I’d need a hold above 1.4642 to start looking for LONGS.
Its difficult trading G/U currently with the Election looming and the likelihood of a GBP damaging hung parliament round the corner making it hard going for GBP BULLS.
The technicals would point to a GBP pullback but the slightest GBP dovish comment will have the BEARS in the market driving the price down.
Tight STOPS are the order of the day.
The weak Retail Sales numbers out of the US yesterday were a golden opportunity to get LONG GBP so it was disappointing that the 200 sma stopped any further move north and I was eventually STOPPED out for 80+.
Overnight and this morning GBP came under more pressure as we sold off down to the 100 sma where GBP turned north again quite strongly.
I missed this entry and will look for LONGS again once/if GBP can clear the 200 sma.
Ideally a break of this level and a 1H candle staying above followed by a test of the 200 for support will be an ideal entry.
Trading any and all USD pairs currently is far more difficult than even 12 months ago.
12 months ago the recent raft of disappointing news out of the US would have seen the greenback plunge but we haven’t seen that happen.
Every time we see any USD weakness we seem to get some comment about rate hikes and off the USD goes again.
It remains my belief that the USD is massively overvalued against many currencies particularly the GBP and EURO and irrespective of election uncertainties and Greece we stand on the verge of a dollar correction.
The dollar index is moving perilously close to the lower leg of a rising channel that goes back to July 2014.
If that channel breaks GBP could move back over 1.50 and beyond quite easily.
Long term we do however technically remain dollar bullish across the board but if the correction comes it could come at any time and could be dramatic.
I remain BULLISH whilst 1.4565 remains intact although 1.4880 would present an irresistible opportunity to SHORT GBP.
That’s for the future though. For now I’m looking for LONGS from somewhere above 1.4790 .
Yesterday I said I was looking for LONGS from 1.4790 area. The 17:00 candle opened above the 200 sma to give me an entry from 1.4805. I pointed out that WR1 resistance at 1.4880 would almost certainly curtail further advances and would present a SHORT opportunity.
Although I closed my LONG at 1.4880 (75+) I decided against shorting the trade with so much upside momentum.
G/U did indeed pull back 70+ pips but it was over the Asian session and I wasn’t around to monitor the trade so I left it.
This morning G/U has advanced further north and all USD pairs are currently gaining on the USD. Its too early to say whether this is the start of a bigger USD decline but the signs are there.
We have seen 2 red candles on the key US Dollar Index and today the price is moving under the key support line that has been in place 9 months.
Should the US Dollar index close below 1200 then we could see large corrections in most USD pairs. We would also see GOLD and SILVER rise.
1.4960 is now key to GBP/USD. This is the Monthly Pivot, the top of a well defined channel and the 61.8 H4 Fib. comes in near.
If GBP can break and hold above 1.4960 we could be going much higher.
Those traders that stick exclusively with MT4 will not be familiar with the USD Index or Dollar Index as its referred to. Its an invaluable chart and highly revealing.
Since last July the USD has marched relentlessly north. For some time now I’ve been of the opinion that its gone too far and for too long without justification.
Don’t get me wrong. The USD is still King and we’ll be in a USD trend north for years or even decades or until the next financial earthquake hits the markets but its strength is out of proportion and a pullback is inevitable.
The USD Index will be the first indicator that will suggest that this pullback has started and we may be on the threshold of it currently.
Since July 2014 we haven’t had 4 consecutive daily red candle closes but unless todays candle heads back north - this is what we’ll have by close of play.
The price is also taking out the 50 day TMA - the triangular moving average for the first time since July - another BEARISH sign.
However.
At 13:30 we have the US CPI numbers.
These numbers have the potential to change the picture dramatically. If the CPI and Core CPI numbers comes in over 0.2% then the USD will reverse sharply north. If, however, the numbers miss the USD could plunge.
GBP has broken all resistance mentioned yesterday at 1.4960 and is currently holding above 1.5000.
This mornings Average Earnings and Claimant Count both missed but this has done nothing to hold back the GBP BULLS. Overbought conditions on the smaller time frames prohibit an entry at these levels but we could see GBP ease back now over the next 2 hours.
Its a complete guess what we’ll see with the CPI numbers so its difficult to set a trade up in advance.
I favour a print of 0.2% or a miss but I shall wait to see the number before I act.
Fridays CPI number came out at 0.2% for both prints as expected and this gave encouragement to the USD BULLS who drove GBP back from the highs of 1.5052 to back under the key 1.5000 level.
So far the Asian session last night and todays open has seen GBP come under more pressure.
The USD Index closed with 4 red Daily candles but today we’ve seen a move north but we haven’t seen a break of 1200 which looks key. If the USD can return back to its tramline (see Thursday’s charts) then we could see a resumption of the dollar trend north but a failure would be BEARISH.
Fridays low of 1.4916 may offer some support but with the USD gathering strength across the board SHORTS look better than LONGS currently but this may not last.
Its a fairly thin news week until Thursday so the picture is very unclear currently.
1.4965 is the Monthly Pivot. If we get a break and hold above here GBP may be gathering for another test of the 1.5000 key level. The Weekly Pivot comes in at 1.4861. GBP could target this and the 200 sma below it but with the RSI’s neutral we could be headed either way.
Best stay out until the waters clear.
Yesterday I suggested that GBP could target the Weekly Pivot and throughout yesterday and last night the BEARS were halted at 1.4861 WP and the 200 EMA (dotted line).
A break here will almost certainly target the 200 sma at 1.48 area.
In the short term with the US Dollar Index overstretched and with the Stoch crossing down from well over 80 we’re likely to see GBP move north from these levels so I’m trying a LONG from 1.4872 with a STOP below the WP at 1.4852 for a 20 pip risk.
Getting this trade to b/e will be the first priority and then see where we go from there in the absence of news.
The technicals look quite good with the H4 200 sma supporting so this trade has got a chance but with so much fundamental uncertainty this trade is in the balance.
A break and hold above 1.4891 (200 sma on 5M chart) would strengthen the position.
My LONG from 1.4870 currently has a STOP at 1.4918 (+48) as we await the MPC minutes at 09:30.
The fact that the Monthly Pivot has twice stopped the BULLS is significant but equally significant is the lack of selling follow through and the support of the 100 sma (in blue).
09:27 The picture looks BULLISH but everything could change in another 3 minutes.
09:31 9-0-0 as expected so we await the statement.
09:33 Statement mildly BULLISH and the GBP BULLS seem to like it.
Well it appears GBP is off to test 1.5000 again. We had a brief spike above this big number on the 18th March and we’ve been close a couple of times since so this number is now not as strong as before.
A break above and more importantly a hold above particularly a daily close above would be very BULLISH for the GBP.
Today’s USD Index candle is red since the start of the days trading which also suggests GBP is headed higher.
We await 1.5000 big number.
This morning my LONG from 1.4870 was STOPPED out at 1.5010 for 140 pips as GBP/USD met resistance at 1.5078.
Yesterday saw a close above the key 1.5000 level and although we’ve dipped back below the signs are this is just a small retrace.
I still have an open position on this pair at 1.5070 that I’ve had for some time and I’ve just added to it by going LONG on the bounce off the Weekly Pivot at 1.4986 with a STOP under it at 1.4956 for a 30 pip risk.
The key resistance shown is now key support.
If GBP can remain above this level for the next few sessions we could be headed much higher thoughs its unclear where the next resistance lies other than the 100 sma which comes in at 1.5100 area.
The key to this and all GBP trades is to take advantage of any GBP strength before the 7th May General Election.
I’ve just closed my 2 GBP LONGS from 1.4986 and 1.5070 at 1.5127 for 141+ and +57 as GBP is at major resistance WR1 and the RSI is showing weakening from overbought. The hourly STOCH also suggests we may move lower from here.
I’ll be looking to BUY back into this market as soon as we see o.b. conditions ease on the smaller and mid time frames possibly around yesterdays high at 1.5070 or just above depending on price action.
The US Dollar Index is now showing signs of stress having failed to recapture its 7 month channel and now slipping under the 55 ema a line that’s been intact since June 2014.
The next key obstacle in the way of GBP BULLS is the 100 sma on the Daily TF. This comes in at 1.5093.
A close today above this line targets 1.54/1.55 however 1.5185 will need to be watched as this is the upper arm of an Andrews Pitchfork channel.
Long term targets for GBP/USD are 1.5308 and 1.5546 that’s if GBP is to continue in its northerly direction.
Currently the charts aren’t looking too appetizing with GBP looking for support which may come at 1.5100.
The H4 has GBP moving south away from o.b. and there’s a rising channel that GBP may look to that comes in anywhere between 1.5050 and 1.5100.
This is a key news week after a fairly quiet week last week. Main focus will be Wednesday’s Advance GDP and FOMC Statement. Since the last FOMC statement most of the news out of the US has been negative so any hint of an increased dovish mood from the Fed and/or a worse than expected GDP print and GBP could race higher.
UK Prelim GDP tomorrow could also set GBP’s direction for the following sessions.
Currently its all a bit in the air. A pullback to 1.5070 would present an excellent LONG opportunity as this would be trendline support and the Weekly Pivot but with the US Dollar Index currently falling GBP may head higher from these levels.
I’m staying on the side lines for the time being and will see how the price develops.
Its always a good sign of the strength of any Forex pair when bad news can be shrugged off.
The Prelim GDP numbers released at 09:30 missed with a 0.3% print against 0.5% expected but after a quick spike down GBP/USd would appear to be recovering the lost ground and is heading back north.
1.5261 is now a key area as this line has rejected the BULLS twice so it will be interesting to see what happens on a third attack.
A break of this line and a hold above would be a good BULL signal but I wont be looking for LONGS if we get the break as just above is 1.5290/1.5295 which is the very strong resistance of WR1 and MR1.
A break and hold of 1.5300 will be my target for another LONG as we maintain this GBP BULL run.
Yesterday I was looking for a break and hold above 1.5300 and that came once it was clear WR1 amd MR1 were not strong enough to turn back the GBP BULLS.
I got in at 1.5306 once the break high of WR1/MR1 was secured.
My STOP at 1.5341 remained in tact in the wake of the dismal US Advance GDP numbers (1.0% expected 0.2% actual) and this sets up the 19:00 FOMC Statement nicely.
Its unimaginable that this statement is going to be anything but dovish and could set the USD plunging.
At close of day today we are certain to have 6 consecutive red candles on the USD Index and its irrefutable now that the USD is in a major decline.
The all important 1.1040 level on EUR/USD has just been breached for the first time in over 5 weeks and GBP is attempting to take out 1.5400.
The 200 day ema on the H1 chart comes in at 1.5457 and the 200 day sma at about 1.55.
1.5546 is the next major resistance.
All looking good for GBP BULLS as we await 19:00.
Yesterday saw the releases of the Advance US GDP numbers that missed (1.0% expected 0.2% actual). This followed on from a raft of weak data coming out of the US all month which has helped see GBP head to just short of 1.55 from its lows at 1.4565 so almost 1000 pips recovered since April 13.
More important was yesterday evenings FOMC Statement.
This proved to be somewhat of a mixed bag with a statement neither dovish (as was expected) or hawkish.
This appears to have left traders wondering exactly where we go from here. Rate cuts weren’t ruled out for September but the onus has been more firmly placed on the data to determine when they are likely to be.
As the data has been poor out of the US all month its unclear where this leaves us. I suspect we may tread water until the NFP numbers on the 8th May but this of course is the day we’ll know the results of the General Election so Friday could be a historic day on the markets.
As far as today and the rest of the week - the GBP BULLISH momentum looks to be still place but its slowing.
I’ve just gone LONG at 1.5433 with a STOP at 1.5438 (+5) to see if GBP is going to have another go at 1.55.
If this trade fails to make progress I’ll stay out until we get a clearer picture.
GBP has advanced solidly from 13th March from 1.4566 to 1.5498 falling just shy of the 1.5500 level.
Poor Manufacturing PMI numbers have done nothing to arrest its current slide from these highs but it may be too soon to call this the resumption of the downtrend.
The rather vague FOMC Statement have left markets looking for clear direction which will almost certainly come next week with a raft of news culminating with the NFP number which of course follows the General Election.
On a technical level the BEARS look in control but this may be a relief rally easing overbought conditions on the higher time frames.
The US Dollar Index is still being held under key levels so a trade in any direction from here looks risky.
If GBP makes it down to 200 day sma support at 1.5181 and we get a bounce I may look for a LONG trade with a tight STOP. If 1.5181 gives way then I’ll look to SHORT with a STOP above.
Huge trading week ahead which I discuss in depth on my Blog on my website. It all kicks off early tomorrow with the RBA Rate Statement and cash rate which most analysts are anticipating no change but I believe there is a very high possibility we’ll see a rate cut. Its the first of an avalanche of market moving news culminating in Thursday’s General Election and Fridays NFP numbers.
Obviously the RBA Statement and decision will have little impact on GBP/USD but its a brave man who can say with any certainty what price GBP/USD will be this time next week.
For the time being the BEARS are in control. We may get a bit of a bounce from here (1.5109 area) but its more probably we’re headed to WS1 support at 1.5008.
If we get down to WS1 I may look for a bounce and go LONG with a tight STOP but a wise man would walk away from this pair currently.
If we get a good Services PMI tomorrow that may boost GBP BULLS but this market will be fraught with danger all week.
Today being a Bank Holiday volumes will be down and that can lead to erratic and sudden price movements.
Staying on the side lines is the best advice.
1.5086 has so far been a barrier to the BEARS advance.
The WS1 Pivot (1.5008) can be a magnet for GBP/USD but even with a poor Construction PMI release the BEARS appear to have stalled.
Its clear that either the BULLS and BEARS are fighting it over this area (around 1.5100) or, more likely, they are both sitting back looking for direction.
If the BULLS can break above the 200 sma and yesterdays high at 1.5174 we may see GBP move higher. A break below 1.5089 opens the door for a move down the WS1 at 1.5008.
I’m on the side lines until get such a move.
No analysis yesterday and today with the UK waiting to see the outcome of the General Election.
Although a hung parliament is priced into GBP/USD there could be extreme volatility throughout the day as the rumour mill starts turning.
22:00 is the time to watch for when the first exit polls are announced.
Any sign of a Conservative victory will boost the GBP across the board and a Conservative majority would send the GBP to the stars but this seems highly unlikely.
Confirmation of a hung Parliament will no doubt weaken the GBP but until the breakdown of all the seats are confirmed this is a market best left alone.
Well finally a momentous week in trading is all but over.
AUD rate reduction, Employment numbers, General Election, NFP Friday - this week has had the lot so where are we up to.?
The GBP has been selling off since July 2014 and so far the signs are its on it way back to test the last high of 1.5550 back on the 26th February.
I’m in LONG from 1.5451 with an open STOP. The NFP numbers suggest a September rate hike is probably off the table and we should see the USD weaken over the next week.
Monday sees a possible UK MPC Statement following the Official Bank Rate but as this is unlikely to be any different from 0.50% expected this shouldn’t affect GBP very much if at all.
Manufacturing Production on Tuesday may help of hinder GBP but all eyes will be on Wednesday’s BOE Inflation Report and all ears will be on what Gov. Carney has to say.
There’s various release out of the US all next week and any one of them could affect the course of GBP/USD but for now we should be headed higher.
