Post Bank Rate.
Nothing new as expected and no MPC Statement indicating no change.
GBP LONGS are looking exhausted so I’ve closed my LONG from 1.5982 at 1.6210 (228+).
Stand aside for the time being is the advice particularly as we have USD Unemployment Claims at 13:30 and RSI overbought on 1H time frame.
As the LSD wore off, the pound made a bit a of a rebound into a new 3-day high. With that, the Arbitrager on Acid took a profit of 121 pips and added 2.01% to his account value after fees. Now a wait for a new 3-day low begins…
With the break of the previously drawn trend line on 9/19, the downward trend could have come under uncertainty. However, on 10/03 and 10/04, new lows confirmed a continuation in the downward trend. With, that, a new trend line from the original 7/15 high to the 9/19 high has been drawn. The Arbitrager on Acid notices that the 10/09 high broke above the previously drawn trend line, but it is below the updated trend line. Within 550 pips below the 200-day moving average and under the trend line, prices still indicate a downward trend has not ended. The Arbitrager on Acid is looking for more LSD to drop.(Expaned view http://i62.tinypic.com/2up7139.jpg)
GBP/USD made it up to the trendline indicated where I exited my LONG position.
I missed the optimum SHORT entry at 16184 but got in at 1.6142.
Price is now at the significant 38.2 on the Weekly time frame so I may be exiting this SHORT soon if there is no follow through.
There’s quite a lot of support in this area so if USD looks as if its generally weakening I may look for LONGS with a STOP under the fib at 1.6033.
(expanded view Ashampoo� Snap Web Upload)
GBP/USD sits right on the Weekly Pivot currently at 1.6081 and its anyone’s guess which way from here. The 2 key support and resistance areas at 1.6224 ® and 1.5962 (S) are both very strong but the resistance area looks particularly strong as this sits above a very strong downward trendline.
In the absence of news its difficult if not impossible to see where GBP/USD goes from here in the short time.
The 100 sma on the 1H TF suggests that the BULLS may be taking control over the near term and GBP looks BULLISH on other charts so my guess would be that we are headed higher. If we are then I’ll be looking to sell in the 1.62 - 1.6224 area or wherever the trendline is hit.
Expanded view Ashampoo� Snap Web Upload)
GBP/USD meandered in a 50 pip range yesterday and the picture remains unclear. Currently the price is 1.6044 so we are roughly between support at 1.5963 and resistance at 1.6224.
GBP CPI in 14 minutes may set GBP’s direction over the near term but this is not likely to be a game changer unless the numbers miss or exceed by a wide margin (1.4% expected)
(Expanded view Ashampoo� Snap Web Upload)
Well, the CPI numbers came in far weaker than expected and the GBP reacted accordingly.
Price has crashed through all areas and has hit the support area I previously marked at 1.5963.
I’m LONG here with a 20 pip STOP but any sign that price is headed back towards 1.5963 (now 1.5973) then I’ll probably exit.
Weaker CPI means there is less chance of imminent interest rate rise which will weaken the GBP so any pullback in GBP should be looked on as a selling opportunity. It really depends on how far we pullback - if indeed we do.
(Expanded view Ashampoo� Snap Web Upload)
Yesterday we saw GBP suffer badly with the worse than expected CPI numbers. Most analysts were calling for this number to come out as expected at 1.4% but it missed significantly at 1.2%. Less inflation means less likelihood of an interest rate increase any time soon and GBP suffered against the USD particularly though recovered significantly against CAD.
Where to from here?
The Average Earnings number has just come in as expected (0.7%). Had this number come in higher (better) then this would have been GBP strengthening (and vice versa) and although there’s been an improvement in the Unemployment Rate the Claimant Count has missed so all in all the 09:30 news releases haven’t altered the overall picture much.
Cable has all but retraced all its gains made from November 2013 to July 2014 when it hit 1.7191.
1.5854 was the start of the BULL run so it’ll be interesting if GBP makes it down here from its current level at 1.5895.
Looking at the 5 minute chart we have an sma squeeze that is indicating a break to the north.
For this reason I think there’s sufficient reason to go LONG so I’m in at 1.5913 with a STOP under the low at 1.5873.
A roller-coaster ride for GBPUSD and the rest of the markets yesterday. Questions marks over the strength of the US and the rest of the worlds economic recovery, talk of triple dip recession in Europe, weak Retail Sales numbers made for a frenetic day in the markets with shares in particular hit badly.
My G/U LONG from 1.5913 was greatly helped by the weak Core Retail Sales (0.2 exp -0.2 act), PPI (0.1 exp -0.1 act) and Retail Sales (-0.1% exp -0.3% act). Once we hit 1.6048 main resistance at the 38.2 Fibonacci I exited for a good few pips.
What happened next was most unexpected. I was waiting for the retrace to get long again but instead G/U sold off right back down to 1.5876 which was the previous low.
There were some dovish noises coming from one of the governors of the BOE yesterday but you wouldn’t have thought that was sufficient to drive G/U back as far as it went.
So a SHORT at the resistance 1.6048 would have been a dream trade but it would have been speculative in the light of the USD weakening news at 13:30.
Where next?
Much now rests on the crucial 1.6039/1.6048 area (I have this 38.2 weekly fib at both these points on different platforms).
1.6039 looks to be most accurate and there is other resistance here.
If GBP/USD makes it to 1.6039 then I’ll look to SHORT with a STOP above.
If price action looks as if this level will break then I’ll go LONG with a STOP below.
Long from 1.6042.
The strong resistance of the 38.2 Fib at 1.6039 appears to have failed holding the GBP BULLS.
1.6224 first target.
My LONG from 1.6042 on the break of 1.6038 resistance proved disappointing as GBP reversed all gains during the Asian session.
I got out with a small profit but was expecting more.
Currently price is held between the Weekly Pivot and the 38.2 Weekly Fib.
GBP must be considered being in a downtrend until significant resistance at 1.6212 - 16224 is broken and held.
Fed Chairman Yellen speaks at 13:30. The market is likely to meander until this time to see what is said.
A break of 1.6090 ( todays open/weekly pivot) and a return and hold to this area could be a nice entry LONG but as GBP is still in a down trend tight stops are mandatory.
(please disregard the screen shot below - this is an uploader error)
In my previous post I referenced 1.6090 as a possible LONG entry.
This area has been broken, returned to and held offering support.
I’m LONG from here 1.6095 with a STOP under the support and the 200 day sma at 1.6085.
There are signs that GBP/USD may have put in a bottom at 1.5863 and could be heading north in more than just a pullback.
The chart above is the Daily GBP/USD time frame and the price is heading towards the upper arm of the descending channel indicated (in blue).
If the price is rejected by this channel in the 1.6180 area then GBP is likely to resume its downward trend.
However.
Channels are very much in the eye of the drawer.
If we redraw this channel thus:-
we now see that the price is currently (1.6112) breaking the upper channel.
1.6186 is the key for GBP/USD today. If 1.6186 is taken out then GBP could be trending north.
There’s no news today so 1.6125 (Yesterdays high) is the first target and 1.6168 (23.6 Fib D.T.F.) is next.
If these areas go and price doesn’t retreat from 1.6186 then LONGS from 1.6186 area with a STOP below are in play.
Yesterday I suggested that 1.6186 would be key for GBP/USD if 1.6125 and 1.6168 could be taken out. These areas of resistance were indeed taken out but the BULLS progress was halted at 1.6186 key resistance.
However.
Its clear that the GBP BEARS are struggling to wrest control from the BULLS and it look as if 1.6186 will be targeted again over the next few hours.
The more this area of resistance is attacked, the weaker it will get.
If this area does indeed fail which I believe it will, then we could be seeing a significant shift in GBP’s fortunes.
Caution is the watchword though as we could yet see a pullback into the 1.6100 area before we move higher again.
Key to any pullback is 1.6079. If this level is still intact by the end of the day then we could see a sustained bull run for GBP/USD over the near term at least.
Yesterday I suggested that 1.6186 was the most significant area on the charts for GBP/USD and this turned out to be the case.
The BULLS made several attempts to push higher but resistance at 1.6186 was too great and the BEARS took control.
I had an anticipated a possible pullback to the 1.6100-1.6079 area but both these levels gave way and it was 1.6010 that finally halted the BEARS advance. This was where GBP/USD bounced back on the 10th October.
So yesterdays SHORT from 1.6186 was a missed opportunity in hindsight but that’s trading.
So where to from here?
The price is currently clearing the 38.2 Weekly Fibonacci and has stayed above this level for several 5 minute candles.
I’m LONG from 1.6046 with a STOP at 1.6025 which is below the Weekly Pivot, the 28.2 Fib and the 50.0 Fib on the Weekly TF.
(Price currently 1.6050)
As long as the upper trendline previously indicated holds we are still in a downtrend so this trade is a bit speculative but we have oversold RSI on several time frames and GBP could make sufficient progress to get a b/e STOP before too long.
US CPI news at 13:30 is likely to kill or make this trade.
Recent news out of the US has disappointed and the general word is that these CPI numbers may miss.
If they do then we could be in business.
Update to my GBP/USD LONG from 1.6046 from this morning.
Although the US CPI numbers were better than expected GBP/USD wasn’t badly affected by this and my STOP at 1.6025 remained in tact supported as it was by the Weekly Pivot and the 50.0 Fibonacci.
Currently the price is 1.6071 so I’ve moved my STOP to near b/e and I shall leave this to see if GBP can head further north.
1.6081 is the 200 sma on the 5m chart. BEARS will be waiting here and its crucial to the success of this LONG trade.
If the BULLS can break 1.6081 return to it and use it for support then 1.6128 is the next significant target.
GBP BULLS may struggle to defeat 1.6128 so I’ll be looking to exit if this level is aggressively rejected.
If however this level is defeated then I’ll hold for ultimate and previously tested resistance at 1.6186.
News at 09:30 has strengthened the BEARS hand. Retail sales (expected -0.1%) came in at -0.3%.
So far though the reaction has been muted and the new low of 1.5998 is holding for now but any retraces should be looked on as selling opportunities.
1.6055 is significant as this is where the 200 sma on the 1H TF sits and has proved insurmountable so far for the BULLS.
If GBP/USD makes it to 1.6055 then look to sell with a STOP above.
Currently the BEARS are trying to break down the 1H 50.0 Fibonacci at 1.6001 (also big number) so there may be some considerable support here.
A break of 1.6000 big number opens the way for a deeper decline to 1.5935 where there will be buying opportunities.
Best advice is to stay out of this market until the waters begin to clear.
13:30 we have US Unemployment claims so GBP/USD may meander until then.
GBP/USD remains equidistant between the main areas of support and resistance at 1.5934 and 1.6186.
For the time being GBP is steadily ascending the trendline marked and in the absence of further news (Prelim GDP at 09:30 came out as expected 0.7% and this has boosted the BULLS) I expect GBP to make further progress north but progress looks as if it will be steady rather than decisive.
The 38.2 Hourly Fib is supporting this move north and GBP has taken out the 38.2 Weekly Fib and the 50.0 Hourly.
I’m LONG from 1.6021 with a b/e STOP and I expect this trade to make further progress.
US New Home Sales will have to be watched at 15:00 but 1.5874 is looking increasingly like a major bottom and GBP could be reversing. The ultimate number to watch is 1.6183 (previous high).
If this is taken out sometime next week then 1.6520 is the next major target.
GBP/USD continues to track north as suggested in my previous post.
The New Home Sales out of the USA narrowly missed which didn’t harm GBP’s steady climb.
Next week will most likely set the agenda for the mid term direction of GBP/USD with Wednesday’s FOMC and other GBP/USD news although there are no direct GBP releases due.
My LONG G/U from 1.6021 now has a STOP set at 1.6043 which is the swing low from mid 13:00 GMT.
There are no major obstacles for GBP/USD to clear from here (1.6090) though there is resistance at 1.6127 which may slow the BULLS.
The area of battle has narrowed to 188 pips with the 2 most significant areas of support and resistance lying at 1.6183 and 1.5995.
The BULLS are now supported by the Monthly 38.2 Fibonacci, all the hourly sma’s and 50 and 100 day sma on the 4H charts.
Overall the picture is one of GBP strength at least over the next few days in the absense of any meaningful data releases.
This may change Wednesday evening when there is an FOMC statement but until then GBP LONGS are in play.
Price is currently 1.6116 and I’ve moved my STOP to 1.6085 (swing low) from my LONG from 1.6021.
There is an upper channel that comes in at 1.6170 area (this is also 23.6 Fib on the DTF).
Clearing this hurdle opens a clear path to GBP’s major test at 1.6183 which is 70 pips north of where we are now.
1.6089 should support any pullbacks and would be good place to enter LONG if you’re not LONG already.
