Trendlines and Channels.
You’ll be able to draw trendlines and possibly channels on most charts on most time frames.
The problem is trying to draw them accurately BEFORE the event which can be tricky rather than AFTER the event which is easy.
As can be seen GBP/USD is in a well defined flag or pennant. GBP is likely to continue in the direction of the break of this flag.
In the chart above GBP/USD is approaching a well defined channel top and there’s a possible trendline that formed yesterday even closer.
What is clear is that the 1.6130 -1.6140 area is going to significant.
1.6145 holds the key today which was yesterdays high.
A break of 1.6145 opens the door to 1.6183.
1.6183 is a line the BEARS must hold otherwise the path is clear to 1.6225-1.6240 resistance and further confirmation that GBP is making a more significant trend change.
US Core Durable Goods at 12:30 and CB Consumer Confidence at 14:00 will impact on GBP/USD if there is any significant deviation from expected.
The Core Durable Goods number was expected at 5.0%.
This was a huge miss at -0.2% and USD rapidly sold off.
As expected 1.6184 area (1.6182 high) was sufficient to send the BULLS back and I exited my GBP/USD LONGS when it was clear no more immediate progress was likely to be made.
Where to from here?
The better than expected CB Consumer Confidence has blunted the BULLS charge but its clear the BEARS are not in control of this pair.
The upper trendline is supporting the BULLS and I expect to see a period of consolidation before another attempt is made on 1.6184.
Best stay out of this market until we see what happens when GBP arrives at 1.6184.
Ideally we are looking for a push through this area and a return to it to see if this will turn support.
If it does then get LONG.
I’m not considering SHORTS on G/U currently.
We’ll probably see a pullback so look out for a pullback to the 200 sma on the 5m chart as a possible entry LONG. This is likely to be in the 16135 area.
Where to from here after the dollar positive FOMC statement.
GBP/USD dropped 130 pips in 10 minutes but has since stabilzed and although it wouild have been nice if the BEARS could have pushed down to 1.5994 which was my strong target buy mark it went close enough to risk a LONG so I’m in at 1.6021 with a STOP under the 1.5994 support at 1.5990.
Much of the Fed news was expected (ending QE) though the jobs outlook was unexpectedly bullish.
This LONG trade is a risk but once the dust settles the outlook hasn’t changed greatly and I expect the dollar to give back some of its gains.
The risk reward on this trade isn’t great with a 31 pip STOP but 1.6089 is a reasonable target for GBP over the next few hours.
Overnight in the Asian session GBP sold off and my LONG was STOPPED.
There’s a cluster of support in the 1.5960 area so I’m back in LONG from 1.5978 with a STOP at 1.5955.
1.5962 is Monthly S1 support and RSI is headed north. The “London” factor may also come into play as GBP is frequently favoured in the London session following steep declines overnight.
I shall move the STOP to b/e at the first opportunity as its unlikely GBP will rally too far in the absence of news.
12:30 we have Advance GDP and Unemployment Claims from the US so if these miss, sentiment may switch.
My LONG from 1.5960 made it up to the 38.2 Fibonacci resistance and was turned back by the BEARS so I exited at 1.6030 for 70 pips.
I still believe the overall GBP/USD picture is medium term BULLISH so I didn’t enter SHORT but decided to wait for the pullback.
Overnight price made it down to MS1 support and bounced quite sharply from this area.
Currently we’ve just broken the 5m 200 sma and held so I’m back in LONG from 1.5997 (1.5959 STOP).
There’s no more news in what has been a tumultuous news week so I’m looking for GBP/USD to regain some of the ground it lost following FOMC though being Friday and Month end I expect volumes to be thin which can result in spiky trading but I don’t think we’ll see that until maybe later this evening.
1.6037 is of primary interest if we get there and any signs of a reversal and I shall exit. This area is now a double Fib - 38.2 on the WTF and 38.2 on the 15m TF.
I shall update the position on Twitter accordingly.
GBP/USD was in a strong and consistent Downtrend during the recent months that sellers were successful in achieving the lowest price of 1.58755. With the formation of a hammer pattern and also Spinning top candlestick pattern(weekly time frame), there is a warning for formation of a bottom price and changing direction in the chart.According to the formed price movements in the chart, there is a Gartley harmonic pattern between the bottom price of 1.58755 and top price of 1.61836 that warns about ascending of the price with completion of this pattern ending point.
RSI indicator in h4 time frame is in saturation sell area and warns about ascending of price according to the next cycle during the next candles. Generally according to the formed signs in price chart, until the bottom price of 1.59505 is preserved, there is a potential for reformation and ascending of the price in this currency pair( the first warning for ascending is breaking of the resistance level of 1.59996).
This is the fib level, the Monthly Pivot, the Weekly Pivot and an area of previous resistance.
This area needs to be broken by GBP BULLS and then used as support.
Best advice is to wait to see what happens when GBP/USD reaches this area. If the price is rejected here then GBP SHORTS are in play. If the level is broken then GBP LONGS would be in play.
Quite a big miss and GBP/USD BULLS are halted in their tracks.
While price remains below the 100 and 200 sma GBP/USD must be considered to be in a short term downtrend (price remains in a long term downtrend).
The 100 sma, 200 sma, Weekly Pivot, Monthly Pivot and 38.3 major Fibonacci level all present formidable obstacles for GBP BULLS.
Its highly likely GBP/USD will meander from these levels until a raft of economic news is released out of the US (ADP Non-Farm and ISM tomorrow, US Unemployment Claims and GBP MPC Bank Statement Thursday and of course the big one on Friday with the Non Farm Employment Change and Unemployment Rate).
Quite a confused picture currently for GBP/USD so best advice is to sit it out and wait until the waters clear.
Should price make it to 1.6040 or even 1.6021 then I’ll be looking for SHORTS as long as price holds below the 200 sma.
Yesterday I suggested 1.6021 may be a point of interest and so it turned out. Price hit 1.6021 at 07:00 and sharply reversed. The Services PMI numbers (58.5 expected 56.2 actual) accelerated GBP’s declines and now much depends on 1.5880.
G/U is oversold on all the lower time frames so I expect a small recovery from current levels (1.5900) though this will probably be short lived.
I expect the BEARS to target 1.5880 sometime this morning as we await ADP Non-Farm at 13:15 and ISM at 15:00 out of the USA.
Price will almost certainly bounce at 1.5880 but how far remains uncertain.
A LONG at 1.5880 with an ultra tight stop (20 pips) and the trade moved to b/e at the first opportunity maybe possible but GBP’s downtrend could accelerate if US news beats target.
GBP/USD has hit my target area at 1.5880 so I’ve gone LONG from 1.5888 with a STOP at 1.5865.
I shall move this trade to break even at the first opportunity as overall USD strength and GBP weakness would suggest this trade could reverse at any time but we may see the oversold conditions ease and GBP head north for a time though the target is impossible to calculate.
1.5926 is the first Fibonacci area that may come into play if G/U doesn’t reverse.
Price action will be the ultimate arbiter of this trade.
My LONG from 1.5888 now has a STOP at 1.5951 locking in 63 pips.
1.6000 big number and 50.0 Fib on the Daily is the next hurdle and 1.6021 resistance above that.
09:30 sees Manufacturing PMI and 12:00 is the Asset Purchase Facility and Bank Rate. No surprises are expected here. This may or may not be followed by the MPC Rate Statement if there is one. Again no surprises are expected but you never know.
13:30 sees the Non-Farm Employment Change and Unemployment Rate out of the USA. If these numbers exceed or disappoint then this trade will most likely either make progress or be STOPPED out.
Tomorrow is the main event with the Non-Farm numbers, Employment Rate and Fed Chair Yellens statement.
These events are likely to set the direction for GBP/USD for the foreseeable future.
The Manufacturing PMI numbers came in better than expected but GBP sold off.
My STOP (1.5951) was hit so I’m out and waiting.
1.5941 may see the limit of the GBP pullback but with so much news coming out best advise is clearly to stay out until all the dust settles after 13:30.
GBP has sold off post Unemployment numbers but the move looks to have halted at the trendline shown.
I’m risking 25 pips going LONG from 1.5895.
My STOP is 1.5870 - this will be moved to b/e as soon as is practical.
No target set for this trade. If the trade is still alive tomorrow I shall leave it to either hit my entry or make progress in the event of a miss on the NFP numbers.
Currently were are at 1.5830 and the significant low at 1.5853 has been broken. 1.5722 is the next meaningful support area (38.2 Daily Fibonacci). 1.5424 is where GBP could be heading over the next few weeks.
Overnight I was expecting further dollar strength to push GBP/USD and EUR/USD further south in order to get a b/e STOP.
This hasn’t happened so the current price is more or less at my entry.
At 10:15 Gov. Carney speaks. No-one knows what effect his speech will have on the markets.
What we do know is that at 13:30, the Non-Farm Employment Change and Unemployment Rate numbers are out.
The word is that the Unemployment Rate may rise by a point (5.9% expected 6.0% is possible) which would be dollar weakening but the Non-Farm numbers may come in way over expectation (possibly 350k).
If this happens GBP/USD and EUR/USD will likely plummet 100+ pips.
The ideal scenario would be to hope GBP drifts lower from here and get a 30/40 pip STOP to anticipate any spike up before the numbers are released.
Much depends on what Carney says at 10:15.
Any newbie traders BE WARNED - make sure you have STOPS on all your dollar positions before 13:30.
