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Trading in normal conditions is difficult.
Trading when the Non-Farm Employment Change numbers are released is impossible.
Not only must you contend with whipsaws (see above) you also have to factor in the widening of the spread which can change from 2 pips to 30 pips in a heartbeat.
Before release there was an expectation that the Employment Rate might miss and the NFEC numbers would exceed.
The reality was the reverse.
As frequently happens when you get mixed numbers you get whipsaws. My SHORT GBP/USD and EUR/USD trades were both hit but the damage wasn’t too bad.
So where to from here?
The path of least resistance look down.
1.5790 and 1.5854 now holds the key.
GBP/USD will need to break what is now support turned resistance at 1.5854 going north and need to hold above 1.5790 heading south.
The overall picture looks bleak for GBP/USD but it may be worth waiting until Monday to get a clearer picture.
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GBP/USD sits at 1.5892 currently roughly half way between significant resistance and support at 1.6072 and 1.5772.
GBP is in an overall BEAR trend whilst it remains below the 100 and 200 sma’s.
On the shorter time frames the picture is BULLISH.
If GBP can take out session high at 1.5916 then in the absence of news a run at 1.6071 major resistance is possible although the 100 and 200 sma will push the BULLS back.
Long term BEARISH, short term BULLISH and USD is looking weak across other pairs so SHORT positions look doubtful.
A break of 1.5916 and a return to it to test for support could be an entry LONG with a tight STOP.
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GBP weakened most of yesterday and overnight but the short term picture is still mildly BULLISH in a long term BEAR trend.
Price is currently 1.5853 and we are now closer to major support at 1.5773 than major resistance at 1.6006 but in the absence of news the shorter time frames suggest we make go higher initially though the last hour has seen some very exaggerated price action on the 1m charts.
If the trendlines marked hold and price can break above the 5m 200sma and stay there we could see GBP move higher but its unclear currently.
I’m not in this market and I’ll remain on the sidelines until we have a more definitive pattern.
GBP is taking out session highs and is holding above the 5m 200 sma.
I’m LONG from 1.5858 with a STOP under session lows at 1.5830.
28 pip risk with an initial target of the Weekly Pivot at 1.5898
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The LONG position I opened from 1.5858 has survived the weaker than expected Claimant Count numbers possibly helped by better than expected Average Earnings.
The price currently is 1.5924 so +66 but with Gov Carney speaking at 10:30 this may be as far as GBP goes.
The general mood of what the Inflation Report may contain, seems to be a revision lower of expected growth.
This will be damaging to the GBP (delayed interest rate expectation) so I may exit this LONG trade before he speaks.
1.5944 would be a good exit as that was yesterdays high so 1.5924 will be my likely STOP (today’s open).
The chances of a GBP sell off after this report is high.
Any LONG positions need to have tight STOPS.
SHORT positions could prove lucrative but as ever second guessing the market is a dangerous game.
GBP has and is suffering after the BOE Inflation Report as suggested.
Governor Carney is currently answering questions but its unlikely he will say anything that moves the market at this point.
GBP is about 80 points down currently and is still falling.
I closed my GBP LONG at 1.5929 and as I was short GBP/JPY I haven’t re-entered this market.
1.5834 is probably GBP’s first target (yesterdays low) with 1.5774 GBP’s likely ultimate target which is WS1 major support.
From this point 1.5865 price may either continue straight down or retrace and then move lower.
If price retraces to Weekly Pivot area (1.5898) this may present an opportunity to SHORT but chasing these moves by entering now is unwise.
GBP/USD at major support 1.57754.
LONG from 1.5786
STOP 1.5764
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Key support at 1.5774 has failed leaving GBP/USD with no real support until 1.5720 which is 38.32 Fibonacci on the Daily time frame.
A fairly light news day today with US Unemployment Claims in at 13:30 and not much else after the mayhem of BOE Inflation Report that left GBP friendless.
Its hard to see any light at the end of the tunnel for GBP/USD with US interest rates now clearly ahead in the raising race and the question now is how far can GBP fall?
1.5371 is the 23.6 Fib of the Daily chart so if 1.5720 fails we could well be heading down there initially.
That said we could yet see some significant retracement for G/U before we head down there so there will be plenty of opportunity for some long play SHORTS.
I’d be wary of shorting from these levels but a pullback to 1.5828 or 1.59 area could present a good shorting opportunity.
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Yesterday I said that if the 38.2 Daily Fibonacci at 1.5719 was taken out it would clear the way for a move to 1.5381 and possibly lower.
1.5662 is a double pivot point and potential trendline support so we may see a bounce from here (1.5671) but the overall picture is gloomy for GBP BULLS.
The Daily RSI is entering oversold but H1 is moving out of o.s. whilst H4 is deeply o.s. and leveling.
If GBP can clear 1.5700 which is todays open then we may see a retrace back to 1.5774 area.
If US Core Retail Sales and Retail Sales at 13:30 followed by the Michigan Consumer Confidence numbers at 12:55 miss then this may accelerate any GBP gains.
However, should these numbers exceed target GBP could come under further pressure.
All positions should be protected going into the weekend in the event of market moving news coming out when trading has closed for the week later today.
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There’s not much on offer for GBP BULLS looking at the charts.
1.5524 looks to be the next target for GBP BEARS which is the WS1 Pivot support. Below that at 1.5377 the next significant Fibonacci level comes in.
No significant news today so its hard to see GBP rallying from these levels (currently 1.5632).
The price has just moved away from the 138.2 Fib extension of the initial move down from 1.7191 so GBP may attempt some form of consolidation as we have oversold conditions on many time frames but the direction remains overwhelmingly south.
If Fridays low at 1.5592 stays intact today and price can take out the 200 sma on the 15m chart we may see a more meaningful rally but staying away from this market for the time being is advised.
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Yesterday I suggested GBP may consolidate and as can be seen the price went nowhere.
A high of 1.5666 and a low of 1.5620 so a 46 pip range from 11:00 yesterday.
CPI numbers at 09:30 which came in better than expected would lead you to think that GBP may break north of this range but so far this has not happened.
The long range view remains BEARISH for GBP/USD but the shorter time frames indicate a move north is more likely.
A break and hold above 1.5662 would be a decent level to go LONG with a STOP at 1.5642.
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GBP has made steady progress north and has broken resistance at the MS2 Pivot and 200 sma on the 15m chart.
I’m LONG from 1.5662 with a STOP at 1.5629
The better than expected CPI numbers should help this trade.
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My LONG from 1.5662 made it to 1.5678 before reversing back to my adjusted STOP for a small loss and GBP continued to lose ground until it hit an area on the charts I’d previously mentioned at 1.5591 which is the 138.2 Fib extension.
The 09:30 MPC Bank Rate and vote although unchanged had a headline that suggested CPI may be boosted. This would potentially bring forward a rate rise and on the strength of this news and the 1.5591 level the GBP is rallying strongly.
Chasing this rally would be ill-advised so waiting to see if we pull back to the 200 sma on the 1m chart and if we have oversold conditions this could leave to an entry.
Waiting for the dust to settle for the next hour or so is advised to see if GBP can hold on to these gains.
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Yesterday MPC statement was more bullish than expected and GBP was lifted to higher ground peaking at 1.5720 where resistance from 61.8 daily Fibonacci, Weekly Pivot and previous resistance sent it back south.
Todays Retail Sales numbers (expected 0.4% actual 0.8%) have given fresh impetus to GBP BULLS and the medium term picture is looking better for GBP long positions.
I’m LONG from 1.5676 with a STOP under the 15m 200 sma at 1.5646.
Caution is needed though as we have US CPI, Core CPI and Unemployment Claims at 13:30 and Philly Fed at 15:00.
Weak numbers will boost GBP but strong numbers will turn this trade south so hopefully we can get to b/e before 13:30.
LONG from 1.5676
STOP b/e
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My LONG from 1.5676 just avoided my STOP yesterday but was soundly rejected by the 200 sma and Weekly Pivot for a 40+ pip gain.
GBP has been under pressure since but we’ve hit yesterdays low and bounced so I’m in again at 1.5648 with a STOP at 1.5624.
The RSI’s are favourable for this trade and there’s no significant news due so this has got a chance.
As ever I shall move the STOP to b/e or juts below at the first opportunity.
Price is now 1.5653 so that’s +5.
1.5672 is the first real hurdle. If the price can clear this hurdle GBP may be heading back to the Weekly Pivot at 1.5734
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MY LONG from 1.5648 made a little progress but meandered back for a small gain and we are now back at more or less where we were Friday at 1.5650.
As long as 1.5590 holds (now supported by Weekly S1) GBP remains more BULLISH than BEARISH medium term but price has a feel of looking for direction and we’ve traded in quite a narrow band now for over a week.
There’s not much of great significance this week as far as news but Tuesday’s Inflation Report may have a bearing followed by US GDP. Wednesday has UK GDP news followed by US Core Durable Goods and Unemployment Claims and New Home Sales but there’s not much else and its unlikely these releases will have more then a knee-jerk reaction on GBP/USD.
If 1.5673 can be cleared and held (15m 200 sma) I may look for a LONG to see if GBP can head towards WR1 at 1.5725 where SHORTS will come into play most likely.
1.5673 has been cleared and returned to and this is now resistance turned support.
I’m LONG from 1.5920 with a STOP at 1.5669 for a 23 pip risk.
1.5725 is the first target.
This is strong resistance and price may well turn back here.
If it does I shall exit my LONG and go SHORT.
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My LONG from yesterday made no real progress so it was closed at b/e.
The BOE report just in has had little impact on GBP/USD.
On the 1H chart GBP is clearly forming a flag/wedge pattern.
A break above this wedge and 1.5725 (WR1 and 61.8 Daily Fibonacci) would be good for the BULLS.
Best to wait to see where GBP goes over the next few hours.
1.5590 remains key to the downside and a break of this level could see GBP tumble.
Prelim GDP at 13:30 out of the USA will need to be watched.
If GBP can break 1.57 initially LONGS could come into play.
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Earlier I suggested a break of 1.5700 and the flag may prove interesting but 1.5725 would be the key area.
Price has broken through the flag and 1.5700 but 1.5725 has held the BULL advance.
GBP looks as if it isn’t finished yet and the signs are looking like another assault on WR1 key resistance.
If we get a break of 1.5725 and price returns to it and holds then go LONG with a STOP below 1.57.
Its unclear at this stage if the BULLS can take out this level as 61.8 Daily Fibonacci sits here as well but if the price can clear this area then its looking quite good for GBP BULLS.
