The start of the week sees the GBP under pressure.
The NFP numbers on Friday were significantly better than expected and the follow through at the start of the week has seen the GBP sell off across the board though interestingly the USD is not racing away.
This suggest we are seeing GBP weakness rather than USD strength.
1.5185 looks a natural target for GBP BEARS which is the 23.6 Fibonacci on the Daily TF and is close to Fridays swing low following the NFP numbers.
Should GBP make it down to 1.5185 then this area will be crucial. Should this support give way the door is open to a much more significant move down to the lower channel line at 1.4928 area.
There’s no significant news due out today though we have G7 all day and any unscheduled comments could affect prices.
The price looks evenly balanced on GBP/USD and although I favour the downside for now this can quickly change.
I shall stay on the sidelines for now and see if we get to 1.5185 and assess the situation at that point.
A break and hold above 1.5291 (Weekly Pivot) may indicate the BULLS are back in the market and I shall look for a LONG trade.
Yesterday I suggested that GBP/USD was headed for key support at 1.5185 as at the time the BEARS were well in control of the market.
I was somewhat hesitant in this assessment which is why I added this: The price looks evenly balanced on GBP/USD and although I favour the downside for now this can quickly change.
Yesterdays low of 1.5221 was as far as the BEARS could take the price before buyers returned and 1.5221 became the second significant higher low from the 1.5170 low.
Today we have seen the price down at 1.5271 and this looks like a possible third higher low and I’ve recommended going LONG here ( entry 1.5279) with a STOP below the low at 1.5270 for just a 9 pip risk.
With the USD coming under pressure there’s a reasonable chance in the absence of news we could be headed back to test resistance at 1.5397 followed by 1.5412.
As I type this I’ve moved to the STOP to +10 so this is a free trade.
The H4 chart looks very bullish. We are now trading outside the right tramline and there’s a supporting trendline (not shown) that comes up nicely from the 13th April at 1.4565.
GBP/USD is currently trapped between support and trendline resistance.
A break either side could set GBP’s direction over the next few periods.
1.5492 looks significant. A break here and I’ll look to SHORT the pair. Above the trendline sits WR2 Pivot at 1.5562 and above that there is a major Fib level so BULLS may find progress difficult.
I favour the down side currently but a break of 1.5492 will be need to confirm.
Signs that last weeks GBP BULL run is faltering are appearing on the charts.
The trendline taken from Friday 5th’s low (coincides with 23.6 Fib extension of the DTF move) at 1.5190 may have peaked at the 38.2 Fib level at 1.5598 and if this trendline is breached and we hold below it then GBP mat be resuming its down trend.
1.5515 is a key level. If we break and hold below this level (200 day sma on 15m TFR) then I shall look to go SHORT.
LONG trades do not appeal with the price 133 pips away from the 200 day SMA on the H1 so I’ll wait to see if we get a break of 1.5515.
Yesterday I was looking for a beak and hold below 1.5515 to go SHORT. Although we got a break of this level the price quickly resumed its path north and no trade was taken.
For 5 of the last 6 trading days GBP/USD has put in a regular pattern of selling off during the Asian and morning session and buying back in the afternoon and evening.
Yesterday followed the same pattern despite signs of a reversal building. Today we have seen GBP sell off once again down to 1.5541 where the price once again is bouncing higher.
However, the price action looks unconvincing and I would be wary of going LONG from here. The 09:30 news was not favourable to GBP and the sma’s on the 5m and 15m are heading south.
I still believe we should see GBP correct lower so I’ll be looking for for a SHORT trade below 1.5554.
If GBP pushes higher then we may see the price move south from either 1.5597 (Todays open) or 1.5613 (Yesterdays high).
The trend is your friend is a much used trading term and its good advice to follow it. That said, all trends end somewhere and picking the top can pay great dividends.
Yesterday,I was looking for a potential top at the trendline marked on the chart in the 1.5613 but GBP has ignored this and the higher trendline and punched through both.
With a hawkish BOE this morning, there seems no stopping the GBP’s rise.
1.5922/1.5950 looks possible and if we get a dovish FOMC Statement at 19:00 then 1.6000 and 1.6500 will be in range.
18:45 Gov. Carney speaks then at 19:00 the FOMC Statement is released and and at 17:30 the FOMC Press Conference begins.
These events will be crucial in setting GBP’s direction for the foreseeable future.
Yesterdays dovish FOMC Statement sent the GBP soaring and one of my target areas 1.5922/1.5950 was hit at 1.5929.
Resistance at this point has sent the GBP south and even good Retail Sales numbers has seen GBP remain below this key level.
With RSI overbought it looks as if the battle is on between the BULLS and the BEARS to take control of this pair.
A sustained break of this high and a hold above would suggest we’re heading higher but the BULLS may find this hard going from these overbought levels.
News out of the USA at 13:30 may hold the key to GBP’s direction over the next few sessions.
A good print and GBP could return to 1.5700 area for meaningful support.
A bad print could see GBP extend higher but any rallys from here are going to ultimately struggle from these levels.
Yesterday I highlighted 1.5763 as a likely area that GBP may head for and this turned out to be the case. In fact GBP BEARS have made 4 attempts to push through this level without success which would suggest GBP is headed higher.
This area (1.5763) is now critical to GBP’s fortunes.
A break of this level and we will probably be headed for WS1 support at 1.5596 but if this level holds and provides support for GBP BULLS we may be headed to trendline quadruple resistance at 1.5930.
A break and hold above 1.5825 (Todays open) and I shall look to go LONG but there’s a somewhat unconvincing look to the price action so caution and tight STOPS are advised.
The 1.5763 area was finally breached yesterday and GBP BEARS drove the price down to the 200 sma on the H1 chart where they could make no further progress.
We’ve seen a bounce off this level (1.5711) but this recovery seems to be fading and we could be headed back to the 200 to test it again in the 1.5736 area which is todays open.
There’s quite a heavy area of support between 1.5705 and 1.5763 as this area contains Weekly Pivot, Yesterday’s Low, Today’s Open, MR1 Pivot and the 200 sma and we could bounce from any one of these ares should the price drift down.
Under 1.5705 and WS1 would open at 1.5596.
Unclear currently where we are headed but a strong US GDP Final GDP number at 13:30 may set direction though this is likely to come out on the money at -0.2%.
Stand aside for now and wait to see where we are headed over the next few hours.
Yesterday I suggested GBP may well head back to test support from the 200 sma on the H1 chart at 1.5733 which is subsequently did and the level failed letting the BEARS drive the price down to 1.5666.
From there we’ve seen the BULLS regain control but now we’re back at the 200 sma at 1.5754 and although the BULLS quickly punched through this level they were subsequently sent back south.
With the Weekly Pivot coming in just above at 1.5663 the BULLS look to have it all to do.
I shall SHORT this pair below 1.5729 with a tight STOP as I still think we’ll see WS1 at 1.5596 either later today or more likely tomorrow.
100 pip trading range yesterday for GBP/USD as 1.5665 low was repeatedly tested for support and the 200 sma in the 1.5770 was tested for resistance.
Overnight we saw the 100 sma cross the 200 sma south which would suggest we’re headed south and support my opinion that we may be heading to test WS1 pivot 1.5596 at some time in the future. The slow price action suggests this may not be until next week now.
Above 15770 will negate this and shift the focus back to LONG trades but for now I favour a SHORT trade below 1.5726 - the 200 sma on the 15M chart.
For some days I’ve been suggesting that GBP was weakening and a likely initial target would be the key WS1 support now at 1.5598.
Little has changed for me to deviate from that opinion and I remain SHORT from 1.5740.
It remains open how deep this retrace will run. It doesn’t look like the resumption of the overall downtrend from 1.7195 but we will not know this until we see what happens lower down.
A break below 1.5469 (trendline support) opens up the possibly of 1.5340 area (200 sma DTF) and a resumption of the down move but I expect GBP to find support lower down but its open as to where that support may come.
For now in the absence of news its unlikely the BULLS will fight back from these levels but a break of 1.5780 would compromise this analysis.
I would stay SHORT if you’re already SHORT or enter SHORT anywhere near here (1.5693)
Yesterday we say GBP recover some ground but the 200 sma again proved a hurdle too far and the BEARS stepped in to send the price south.
My initial SHORT was stopped at break even so I re-entered at 1.5764 as it became evident the 200 sma was holding.
Moving Averages are a much maligned indicator because people argue they lag and only show you where the price was and not where the price will be. Personally I think they are an invaluable tool as they act as formidable resistance and support particularly on the H1 time frame. Its clear from the chart above that the 200 day sma is heading south. This supports my analysis that we are headed to 1.5600 where Pivot WS1 sits.
The Current Account data was slightly weaker than expected so this should add to the downward pressure.
SHORT from here 1.5729 with a STOP above the 200 sma (1.5778) could make progress.
Against popular expectation the early NFP numbers missed target and coupled with an Average earnings miss the USD quickly lost favour and GBP BULLS took advantage.
I’m LONG from 1.5609 with a STOP under the support below.
The UK Services PMI have just come in with a 58.5 print against expected 57.4 so that should boost GBP LONGS.
With today being a Bank Holiday in the US we would normally expect light trading and slow price action but in these volatile times anything is possible.
Sunday we see the Greek Referendum so you will need to plan carefully if you intend to have open positions going into this event.
No-one knows how this will turn out and what effect this will have on currencies.
The safest play would be to protect all trades with a 60 pip minimum STOP but you’d be better off waiting for Sunday’s open and reacting accordingly.
For today I expect GBP/USD to head towards 1.57 in the absence of news but we may not get there today with thin volumes.
Fridays BULLISH momentum halted at 1.5642 so my LONG from 1.5609 had to close for +18.
Having broken the Weekly Pivot I had expected this pair to push further north but in these turbulent times nothing surprises.
The mood has quickly shifted against the GBP and GBPUSD looks particularly BEARISH and is currently supported by the 200 day sma on the H4 charts.
Its direction from here is unclear. Below 1.5539 is a significant trendline. Under this line which comes in at about 1.55 will open up a much more severe possible move to down side.
Above 1.56 and the picture will look more BULLISH.
I shall stay on the side lines until we see where we go from here.
