Its taken all week but GBP/USD has all but closed the gap from Mondays open. My GBP/USD LONGS were STOPPED out for +155 and +69. These STOPs were victims of market uncertainty before a new Scottish Referendum poll that revealed the gap between the YES and NO camp had narrowed on the face of it but its not how I saw it.
This poll gave strength to my belief that there will be a resounding NO vote come the 18th. The number of “don’t know’s” went from 10% to 17%. I’m fairly certain that these were YES voters who had shifted their position to neutral.
As a consequence I re-entered LONG GBP/USD at 1.6227 with a 30 pip STOP.
I fully expect the GBP to strengthen from here. I suspect that a NO vote will give GBP an inevitable boost but as the poll draws closer I believe the market is already factoring in this eventuality.
Should, however, there be a YES vote then expect Sterling to plummet.
GBP/USD is now supported by the 100 sma and is attempting to break down the 200sma.
The 1 hour 200 sma is arguably one of the most important indicators on any chart and BEARS will usually defend this line strongly. So far the BULLS haven’t been repulsed which suggests there’s more GBP strength to come.
Last weeks opening gap hasn’t been completely filled which also suggests there’s more to come from the GBP BULLS.
The DAILY 61.8 fib lies at 1.6285. If GBP/USD can defeat the 200 sma AND get through this fib. then we could see be seeing a substantial GBP rally.
If this position can be held into the early hours of Friday when we’ll know the outcome of the referendum, there’s no reason why GBP can’t return to 1.72 as long as we get a NO vote which is what I expect.
The 200 sma proved too strong for the GBP BULLS and price is now clearly being held down by it. We are however now in what I call an SMA squeeze. Here the 200 sma 100 sma and the 50 sma are all converging and they are in their “correct” order for a BULL breakout (50sma at the top 100sma in the middle and 200 sma below).
If the Scottish Referendum wasn’t on Thursday a LONG here at 1.6200 with a STOP @ 1.6155 (45 pip risk) could be attempted but its risky.
If the price can break the 200 sma on the 5m chart then return to it to test it and head back north it may be worth going long with a 15 pip STOP from 1.6200
What I’m trying to do here is get LONG BEFORE the Scottish vote and hopefully get a b/e trade in order to maximize the benefits of a NO vote.
As I’d hoped the price took out the 200 sma on the 5m chart and returned to “test” it. This is always a good trading signal if resistance turns support.
I entered this trade LONG at 1.6213 with a 35 pip STOP that I’ve now adjusted to 1.6224 for a 13+ pip gain at worst.
I’m hoping this is the start of some sustained GBP buying and I can keep this trade open until the results of the Scottish Referendum are known. A NO vote should accelerate this position by 100+ pips and we could then be looking at GBP heading towards 1.66 and above.
My GBP/USD LONG from 1.6213 is approaching an area of strong resistance. I’d like to hold this position into the Scottish Referendum but 1.6338 may prove too tough a barrier for GBP BULLS. The story is further complicated by a raft of numbers out shortly (Average Earnings, Claimant Count and MPC votes).
I think I’ll tighten the STOPS on this trade to 1.6280 (61.8 fib) or higher and see if the news is BULLISH.
GBP/USD LONG
STOPS moved to 1.6302 (+89)
Many times trading Forex you just can’t win. The numbers released at 09:30 ALL beat expectation and this should have boosted GBP BULLS, instead it sold off.
The only explanation for this has to be the Bank Rate Voting which I can only assume the markets were hoping for a another dove to leave and join the hawks. It seems a bit churlish that that was enough to weaken the GBP but there you have it and my STOP has been hit.
I’ll be looking to re-enter this market LONG possibly in the 1.6281 area if we get there. If the price doesn’t get that far then if the BULLS can clear resistance at 1.6338 and return to it and test it for support , i’ll look to BUY.
Over the last year, the run up to the mid-July high was full of peaks that were 700-900 pips above the 200-day moving average. Now that the price has fallen below the 200-day moving average, we are in a bearish situation. The price is only 530 pips below the 200-day moving average. I am only taking shorts so long as we are below that average. I am set to go short at a break below the current 3-day low of 1.6160. With that, I will groom my stop win-or-lose along the 3-day high till it is hit. If we get a long move lower I will stop grooming along the 3-day high when the 7-day high passes into profitable territory and follow it win-or-lose until it is hit.
It appears as if GBP BULLS are making another assault on the 1.6338 area.
The 61.8 fib has been cleared at 1.633.88 and the MA’s are widening as anticipated.
If the BULLS can clear 1.6338 and subsequently defend it I’ll go LONG with a STOP below 1.6338 in the 1.6330 area.
The last opinion poll on the Scottish Referendum gave the NO camp a healthy lead.
Price action suggested that the 1.6338 barrier would be overwhelmed by the BULLS so I went LONG at 1.6335 with a 12 pip STOP.
The news at 13:30 hasn’t hurt the GBP/USD so I expect this pair to head north for the foreseeable future.
Increasingly a NO vote is being priced into the market so when the result comes tomorrow morning I don’t expect a major move (unless its a YES vote).
There’s no reason why GBP/USD can’t recover 1.70 from this position.
1.6400 looks like a new resistance area that GBP BULLS will need to get past to make progress.
The price is currently held in an 80 pip range between former resistance now support 1.6339 and the 1.6400 handle.
I’m still LONG from 1.6335 with a STOP at 1.6338 (+3).
Price may meander between these 2 levels unless we hear any rumours or news.
If the trade is still alive by 7:00 tomorrow, the inevitable NO vote should send GBP past 1.6400 and towards higher ground.
Where next for GBP/USD?
My GBP/USD LONG from yesterday netted me 87 pips before profit takers took the price down to my STOP.
There is nothing to suggest that GBP won’t advance north again and this pull back is a good opportunity to go LONG.
An obvious place is the previous resistance turned support at 1.6340 area.
I’m LONG from 1.6346 with A STOP under all the support at 1.6314 for a 32 pip risk.
I’ll move this STOP once the 50 sma on the 5m chart has been cleared.
(please ignore the image below - this appears to be a bug in the image uploader)
Good trade for today, thank you.
Just a quick heads up on GBP/USD.
GBP has weakened considerably since making highs at 1.6523.
My LONG from support at 1.6340 has hit my STOP at 1.6314.
I was tempted to move this STOP down to 1.6280 but decided against risking 60 pips.
The 1.6286 area is interesting as this is a double fib meeting point. Its the 50.0 fib on the Hourly chart and the 61.8 fib on the Daily chart. Its also a known area of support/resistance.
I strongly suspect we are headed for this area but as we approach the close of play trading will probably slow.
If we get there before the close and the price doesn’t break 1.6286 then it may be worth getting LONG with a 15 pip STOP.
There’s a good chance GBP will open higher when we open for trading as traders digest the consequences of the No vote and thoughts return to the question of the BOE raising interest rates.
http://i62.tinypic.com/20s9m5z.jpg
Where next for GBP/USD this week?
In my last post I suggested GBP/USD might bounce from the double fib at 1.6282 which it did and I can see no reason why GBP shouldn’t head north to 1.6500 resistance.
Its a very light news week as far as direct GBP news is concerned though we have New Home Sales out of the US on Wednesday and Durable Goods and Unemployment news Thursday which will influence the pair but is unlikely to be a game changer.
1.6498-1.6523 is all resistance so if GBP makes it this far north I’ll plan my trades accordingly.
I’m currently LONG GBP/USD from 1.6299 with a b/e STOP.
More on my website.
(For a full screenshot http://i57.tinypic.com/21ahbbt.jpg)
Over the Asian session GBP was bid but it sold off on the London open. Since then GBP/USD has rallied and strengthened.
MY LONG from 1.6299 now has a b/e STOP which I shall adjust once certain ma’s have been cleared.
The 76.4 fib comes in at 1.6412 which may hold up the BULLS temporarily but I don’t expect this level to present too much of a hurdle.
In the absence of news my 1.6500 initial target looks attainable.
(For full size go here http://i60.tinypic.com/ve3nth.jpg)
The 76.4 resistance at 1.6412 proved more testing for the BULLS than I expected and we got a 60+ pip retrace.
This is not a problem as long as the support beneath holds. In this case the double support of the 1 hour 50 and 100 sma and beneath that a strong trendline and the 1 hour 200 sma.
Its unlikely looking at the chart that the BEARS will be able to break down all this support so I’m still confident we are headed for 1.6500 from where we are now at 1.6364.
This trade (LONG from 1.6299) has a break even stop which will be moved up below the 200 day sma as it rises.
(here for large size http://i62.tinypic.com/a0aus4.jpg)
Well the 76.4 fib has sent the BULLS packing again but only as far as the ever climbing 100 day sma.
The area in the square could see some intense action as price is squeezed between the BEARS waiting at the 76.4 fib and the BULLS driving up the 100 sma and 50 sma.
I still expect the BULLS to win this battle and if they break 1.6414 then 1.6453 is the next resistance area. Clearing 1.6453 opens up the primary target of 1.6400.
My LONG from 1.6299 now has a STOP at 1.6340 (+41)
(for large size image go here http://i62.tinypic.com/1g11q8.jpg
There are many “professional” traders who offer expensive teaching courses yet steadfastly refuse to prove they make a profit trading forex by opening their books to examination through myfxbook for example.
Some of these traders claim never to look at a smaller time frame than the 4hours chart and boast that they generally trade off the 1 day chart with no indicators relying purely on “price action” to determine a possible trade.
This is nonsense.
There are certain indicators that are ESSENTIAL on every chart and price action is completely invisible on time frames greater than 1 hour.
True price action can only be seen on the 1 minute chart and I shall explain why this at another time.
Currently the BULLS and the BEARS are at war on GBP/USD.
This war will shortly intensify. No-one knows when. Its possible this will happen at 15:00 when US New Home Sales come but if it doesn’t then its likely to be later this evening or tomorrow morning.
Hopefully it will be this evening and I shall do a video explaining whats happening but for now I give some general pointers.
The 1hour chart above clearly shows the battle between the Bulls and the BEARS.
The 76.4 resistance at 1.6413 has been tested 4 times and on each occasion the BULLS have been repulsed. Every time this happens the line weakens.
The 100 SMA is supporting the BULL charge. Beneath the 100 sma is more support for the BULLS so the BEARS are in trouble.
The BULLS are likely to break this fib resistance at some time in the near future. If it doesn’t happen at 15:00 at we get a USD favourable print then the BULLS may have to retreat to regroup but eventually I expect 1.6413 to give way.
When it does we could see a spike up as the BEARS defenses collapse and they retreat to 1.6453
Over the space of 24 hours the 76.4 fib at 1.6412 was attacked 6 times by the BULLS and on each occasion the BEARS failed to make new lows in response. In normal conditions this would be a sign that the BULLS are in control and will try again to take this level out.
( Expanded view - http://i57.tinypic.com/281h0xv.jpg)
News, however, will frequently change the mood.
A combination of an unscheduled statement on the state of the UK’s public finances and the USD New Home Sales beating expectation by some margin was enough for the BULLS to leave the market leaving the BEARS in control and the price has been driven through all support and currently sits back at the double fib area at 1.6285 area.
As London will frequently reverse the losses suffered by GBP/USD during the Asian session there’s enough support down here to risk a LONG GBP/USD with a tight STOP so I’m in at 1.6291 with a 20 pip STOP.
The 4H 100 sma has been significant recently for GBP/USD and we are sat on top of that line now and it appears to be leveling.
I’m not 100% on this trade as GBP appears to be at the mercy of even mildly dovish news but its worth 20 pips.
