GBP was declining before the awful Manufacturing Production numbers and GBP’s retreat is looking increasingly like a rout.
Yesterday I highlighted 1.5540 as a critical area for GBP/USD and we’ve broken through this level and several lines of support.
A decline to 1.5461 (WS1 Pivot) look inevitable and a break here opens up the 23.6 pivot at 1.5185.
If you’re SHORT then stay SHORT.
Nothing for LONG positions that I can see.
GBP’s sell off continues and we’ve crashed through 1.5461.
Currently the BEARS may struggle to make any further immediate progress as there’s support for GBP in this region ( 1.5390).
1.5460 is now strong resistance so GBP BULLS may stage a fight back but its unclear how effective this is going to be.
I’ve exited my SHORT from 1.5620 and am now on the side lines until the picture becomes clearer.
Ideally a failure at 1.5460 may prove a good entry SHORT.
It always helps to look at the bigger picture when trading to get a feel for where we are over longer time frames.
On this Daily chart we can see the retrace GBP has put in from 1.6 and if we are to get a recovery then this could be a likely area.
We’ve pulled back to the 200 day sma a very strong supportive line. Beneath this line in blue is the 100 day sma coming to meet it.
The question is, where do we go from here. If 1.5326 is breached we may be headed much lower if the price breaks through the 100 day sma as well.
1.5185 will have to be watched as this is the 23.6 Fib on the DTF.
Below this level and its likely we’ll be testing the lows at 1.4565.
For the BULLS, above 1.5411 which is the 15M 200 day sma and the picture becomes more BULLISH.
For now we seem to be headed up but 1.5460 as mentioned before might be too much and could be a good SHORT entry.
Today at 12:00 we have the Official Bank rate and Asset Purchase facility and the market moving MPC Statement (if there is one) so best advice is clearly to stay out of this market if you’re not in and wait until after 12:00.
The 200 day sma on the DTF (Daily Time Frame) has so far provided good support for GBP/USD BULLS as I mentioned yesterday.
Yesterdays candle was a pleasing Doji reversal so this suggest we are headed higher but we need to be wary of 1.5460 which I have targeted as a possible reversal area.
The BULLS have been in control of this pair relatively untested since the bounce from 1.5330 but WS1 Pivot could be make or break.
We will know whether this push north is a retrace allowing the BEARS to gather momentum of a more meaningful pullback depending on what happens at 1.5460.
Price is almost certain to weaken from here but the strength or weakness of the GBP BEARS will be revealed depending how far they can push the price south.
Below 1.5441 and I may look to SHORT this pair but if we can break and hold above 1.5460 I’ll be looking for LONGS.
Last Friday I was looking for a sustained recovery from GBP from the 200 sma on the DTF and from WS1 Pivot support.
The key level I was watching was 1.5460 and a break and hold above here was an area I was looking for to go LONG.
That entry was found at 1.5478 and I remain LONG from there.
1.5649 is the next key level for GBP/USD this being the WR1 Pivot.
There is however more resistance below that at 1.5594 (Monthly Pivot) and 1.5586 (38.2 Fib).
I expect GBP will clear these levels and target 1.5649 where I will need to see if we punch though or retreat. If we retreat I shall close my LONG trade.
A break of 1.5649 will open up a possible climb to 1.5878 which is the next fib level on the Daily time frame.
My LONG trade from 1.5478 was STOPPED at 1.5560 when the resistance I mentioned yesterday at 1.5586 proved too much for GBP BULLS and we saw quite a rapid sell off.
This sell off was deeper than I had anticipated and was eventually halted at the 25 day sma on the H4 charts.
SInce then we’ve seen GBP strengthen despite a somewhat average news print at 09:30.
1.5502 is the first hurdle GBP BULLS need to clear being the key 200 day sma on the H1 chart.
A break and hold above 1.5502 would be a clear LONG signal and would lead the way for another attempt to break the resistance of the Monthly Pivot and 38.2 Daily fib in 1.5590 area.
Whilst we stay above the 1.5321 level on the 200 day on the Daily time frame I favour GBP to head higher but a failure at 1.55 could alter this analysis.
Gov. Carney speaks at 12:45 so he may have an impact on GBP but its not expected.
More meaningful will 13:30 when the US Core Retail Sales and Retail Sales hit the wires.
A strong reading here could hurt all USD SHORT positions as a September rate hike could be back on the table.
Some confusion on my calendar about Gov. Carney’s statement.
The Inflation Report Hearing at 10:15 has been followed by a lengthy report from the Governor.
Not sure whether he’s on his feet at 12:45 as scheduled however its all academic really as Carney has really got GBP BULLS excited with news that he thinks a GBP rate rise could be on the cards sooner rather than later.
Fortunately my LONG GBP/USD (from 1.5510) and my long GBP/CHF (from 1.4613) are now racing away so thanks Mark!
First post here guys, trying to digest what Carney said and how it has affected GBP. Do you think it will be a long term boost?
I was watching a video earlier explaining some technicals and the analyst said that they feel GBP/USD can be a sell based on a Fibonacci retracement from recent highs around 1.5930 to 1.5250.
I closed my LONG from 1.5510 at WR1 resistance at 1.5650 for +140.
With Gov. Carneys BULLISH comments yesterday I was reluctant to SELL at this key Pivot level so I’m on the side lines currently.
Average Earnings and Claimant Count missed so this has added to the pressure on GBP BULLS but we’ve only dropped 40+ pips from WR1 Pivot and we’ve had GBP weakening news and USD positive news (PPI).
This suggest that the GBP BEARS are not in full control and may struggle to push the price down.
Fed Chair Yellen is up at 15:00 so any suggestion that a September rate rise is on the cards will accelerate any GBP moves south but with the poor US Retail Sales yesterday its unlikely we’ll get anything other than neutral comments.
A break and hold above WR1 Pivot at 1.5660 will be a clear sign we’re headed higher and a test of 1.5929 high could be on the cards.
A break of 1.5490 would suggest we’re headed lower.
I just favour LONGS from here but the picture isn’t clear so I’m out of this market until we get more clarity or if Chair Yellen drops a bomb.
Yesterday I was looking for a break and hold of 1.5650 WR1 Pivot for a LONG entry or a break of 1.5490 for a SHORT trade.
We got neither although the WR1 Pivot was tested again which suggest the BULLS aren’t ready to give ground.
US Unemployment Claims up at 13:30 and Fed Chair Yellen at 15:00 may take GBP in one direction or another but for now as there is no confirmation of direction I remain on the side lines.
Overnight we got the break of WR1 Pivot as anticipated.
This happened at 05:00 GMT so I missed any possible entry but its always advisable to wait to see if significant levels are returned to, to act as support.
This has now occurred and I’m in LONG at 1.5653 with a STOP at 1.5600.
With Gov. Stevens very GBP bullish comments about interest rates yesterday its likely we’ll see GBP strengthen across the board though any retraces can be deep.
News out of the US at 13:30 (Building permits, CPI, Core CPI) and 15:00 (Prelim UoM Consumer Sentiment) may well impact on any GBP positions later.
Fridays trade was doomed to failure as resistance in the 1.5670 region was enough to send the BULLS packing.
Since then GBP staged a partial recovery before selling off for the rest of Friday and that sell off has continued.
GBP across the board looks weak this morning and clearly the BULLISH edge given to the pair from Gov. Stevens comments has worn off.
I expect GBP to sell of further at least to the 200 sma at 1.5525.
If this level fails then WS1 Pivot at 1.5477 is in range.
There is however a chance of a bounce at 1.5525 as this is not only the 200 sma on H1 but its the 55 sma on H4.
I’ll wait to see what happens when/if we get to 1.5525.
Hey forexportal,
Did you get stopped out on this?. What’s your next move here?.
I only trade two pairs inc gbp/usd and follow this thread with interest.
Thanks,
Shyfx.
A quick reply to Shyfx. Yes Fridays trade was a loss. I got out before my STOP was hit when it was clear GBP has heading south.
As far as today’s analysis.
I was looking for the price to reach the 200 sma on the H1 time frame but we never got there as can be seen. The 200 would have given an entry LONG had it held and an entry SHORT had it broken but as the price stayed above there was no clear entry.
The picture looks muddy currently. The price is trapped between the 100 sma (blue) and 200 sma (black) and we could break either way.
Intuitively the chart has a downward look to it with the Monthly Pivot and 55 sma (red) holding the price down.
There’s support and resistance between 1.5547 and 1.5604 so staying on the sidelines until we clear either of these 2 levels is advised.
I slightly prefer a SHORT trade to target WS1 support at 1.5477 if I was taking one but I’ll wait until we get a break and hold below the 200 sma (currently at 1.5547 but this will change) before I enter SHORT or alternatively if we get a break and hold above 1.56 I’ll look for a LONG trade.
Very thin news day either side of the pond so unless we get an unscheduled comment from someone we may see some consolidation from here and a sideways move.
Just gone SHORT at 1.5540 STOP at 1.5560
For 19 hours the 200 sma was the battleground between GBP BULLS and BEARS.
My speculative SHORT hit my 20 pip STOP as the price criss-crossed the 200 sma.
4 hours ago the BEARS gave up the fight and GBP pushed strongly north and has broken through the upper side of a well defined downward channel.
On the Daily time frame this break looks significant and suggests we may be headed higher which in the light of Gov. Stevens BULLISH comments regarding interest rates would be no surprise.
No surprises with the MPC data at 09:30 so with an anticipated healthy Retail Sales number due tomorrow we could be seeing GBP head for WR1 Pivot at 1.5701 and beyond.
Hey forexportal,
Sorry for the late reply and thank you for taking the time to leave your reply. Your post hasn’t appeared on my app forum, but had an email with your reply and it’s on the main site!.
Anyway, great to hear your thoughts, you don’t need me to tell you it’s good analysis, and I too will be quietly sitting on the sidelines until we see a confirmed move, made a few pips out of gbp/usd over the last couple of days but had the time to sit and monitor these from entry to exit. I am looking for the breakdown of the support before I enter.
Having seen your post on the main site and not the app I’ve realised you’re only about 30 miles away from me, I’m south of preston. Small world!.
Have a good weekend and best wishes for the week ahead,
Shyfx
Every trader sets his charts up in his/her own way and uses those indicators they feel work for them.
Some “professional” traders proudly claim to use no indicators and still make money trading which is an impossibility unless you’re prepared to have 200 pip STOPS and are happy to close a trade when you’re 400 pips down and risk spanking your account.
Too many indicators are unnecessary but to have no indicators is like driving a car with you’re head in a sack - its not impossible but you’re not going to get very far and your certain to ultimately crash.
Every trader should use Pivots. Every trader should have on their charts the Weekly Support 1 and Weekly Resistance 1 Pivot levels.
Why?
Because they work.
They don’t always work but when they do work there is no better way to find an entry and a STOP.
In this screen shot GBP/USD retreated from resistance around WR1 on several occasions. In my last post on Wednesday I suggested GBP/USD may be headed higher and I still believe that as long as we remain above 1.5456 we will head higher but WR1 resistance has to be broken to make progress and the WR1 Pivot is often an ideal SHORT opportunity.
I was away Thursday and Friday and missed the WR1 SHORT at 1.5638 with a STOP above the 3 previous highs at 1.5672. A 40 pip STOP trade that could have been moved to break even shortly posting would have made 150+ pips as the price made its way down to the lower trendline.
This is why WR1 and WS1 are key levels and should always be present on every chart.
So where to this week for GBP/USD?
Currently the price looks increasingly BULLISH and I’m testing a small LONG from 1.5508 with a STOP at 1.5486 under the swing low.
I’m not overly optimistic but there’s more support below then resistance above so we may be headed higher off the bottom channel on the Daily TF.
13:30 sees US Core Durable Goods which may impact on price but not significantly so.
Yesterday I featured the importance of Pivots in trading and specifically the WR1 and WS1 Pivots which should be placed on every chart.
Every Pivot point though is or can be significant and when price approaches a Pivot point the price action needs to be examined carefully.
Yesterday my LONG trade from 1.5508 made it to the Monthly Pivot at 1.5594 and this was clearly a level the BEARS were waiting to enter the market. When it was clear that the BEARS had taken control I exited my LONG at 1.5574.
Todays UK Prelim GDP met target and that was good enough for GBP BULLS to come back in and we’ve seen a 50 pip move since 09:30.
The picture isn’t overly clear currently as we sit right on top of the 200 sma on the H1 and we need to break and hold above this level for at least one hourly candle but even this would be a risky LONG trade with the Monthly Pivot just above and having acted as resistance yesterday.
Further complicating matters is the 38.2 Daily Fib at 1.5568 which may act as support if the price moves down to it but will act as resistance if the price moves under it.
RSI levels are too high on 5M and 15M to go LONG from here so I’m leaving this market for the time being and will look again in an an hour or two.
I’m favouring LONG trades in the absence of any further news but we are at the top of a potential down channel so we may ease back from these levels before another move north.
