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The 1.5725 area previously mentioned has yet again held the BULLS advance.
GDP numbers came in as expected so that hasn’t hurt GBP/USD and the charts imply were heading back up for another attempt to take out WR1.
GBP is now trading well above the trendline/flag I referred to yesterday and overall the short/medium term looks BULLISH.
WR1/61.8 Fib is only 25 pips away so its odds on the BULLS will be having another go.
A break, return and hold here would be a strong BUY signal.
More later if we get there.
Ashampoo� Snap Web Upload
Market conditions met.
1.5725 has been broken and we now wait for the price to pull back to go LONG.
LONG from 1.5729
STOP 1.5713 (under todays open)
STOP moved down to 1.5705.
24 pip risk on this trade.
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US Core Durable Goods and Unemployment missed and this has helped GBP LONGS.
Price has hit WR2 and reversed as expected but WR2 doesn’t usually present much of a barrier so I expect GBP BULLS to attempt to take this level out again.
If the price can break through WR2 at 1.5805 then we should see 1.5828 next (Monthly S1).
15:00 we have New Home Sales out of the US. If these numbers exceed expectation then this trade may be finished but if the numbers disappoint then GBP could strengthen.
I’ve moved my STOP to 1.5752 locking in 23 pips.
STOP moved to 1.5773 (+44)
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My LONG from 1.5729 made it up to 1.5827 where Monthly S1 turned it back and GBP rapidly pulled back 70 pips hitting my STOP for 44 pips.
As I type this the price is still falling.
I’ve marked 1.5737 on the chart as this is the 15m 200sma. If GBP is going to stage a reversal then this will be the BULLS best chance before 1.5725 and trendline support under that at 1.57 area.
I may look to go LONG if 1.5737 holds or we get a “scalded cat” bounce off it which is possible.
Its impossible to gauge the strength of this BEAR push currently in the absence of BULL support so staying out of the market for the time being is advised.
More later depending on what happens.
(No significant GBP news today but EURO traders will need to hear what President Draghi says at 11:30.
Price has worked its way down to the area I’m interested in at 1.3737/9.
There’s been no bounce off this area suggesting there’s no flood of buyers here but the price has steadily moved away from the area so the BULLS could be rallying.
A break above the 1m 200 sma at 1.5755 and then a return and hold could be a LONG entry.
If we get there and it looks right then I’ll post a comment.
LONG from 1.5758
STOP 1.5738 (-20 pip risk)
Target to be determined
STOPPED 1.5738 (-20 pips)
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Trendlines.
There are 2 types of trendlines. Potential and actual. An actual trendline is any 3 points on a chart that connect. I call these trendlines honest.
A dishonest trendline is 2 points on a chart. These are trendlines have have not been legitimized with a third touch.
Yesterday I places a trendline on my chart A - B. This line had 3 points of contact and overnight GBP bounced again off this line but the BEARS drove the price through it and it turned resistance.
The trendline I didn’t have on my chart was A - C.
This was legitimized at 07:00 by the price bounce at X.
Currently the price is trapped between these 2 trendlines.
The upper trendline sits just below WR1 and the 61.8 Daily Fib previously mentioned.
This is formidable resistance.
2 days ago the BULLS broke this line and advanced 100 pips but were sent back by Weekly R2 and Monthly S1.
The lower trendline sits above Monthly S2 and Weekly Pivot both areas of decent support.
Adding to the confusion the 200 sma on the 1H chart is right in the middle of these 2 trendlines.
Other time frames suggest we’re going higher from 1.5707.
Should price break 1.5725 (as Wednesday’s post) I shall look to go LONG.
SHORTS look too risky unless 1.5662 gives which doesn’t look likely in the absence of news.
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Price has returned to the lower trendline and bounced so this is a good area to go LONG.
I’m in at 1.5684 with a STOP under the swing low at 1.5672
This may just be a short retrace so I need to get to b/e as soon as possible which will be when/if I get to +20/25 pips
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Overnight the key 1.5590 area previously discussed was breached but the BULLS forced the BEAR threat back and GBP strengthened helped at 09:30 with a better than expected Manufacturing PMI print (53.5 against 53.1 expected).
As long as 1.5590 holds GBP remains mildly BULLISH.
The first target for GBP BULLS is 1.5679-1.5687 area. This is the Weekly Pivot and 200 sma on the 15m chart with the 200 sma on the 1h chart not far above that.
A break above 1.5691 followed by a return to it to test for support and a move away would be a BUY signal.
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Target for any LONGS would be either Monthly Pivot at 1.5741 or Weekly R1 at 1.5756 where SHORTS would come into play.
Price crashed through 1.5682 today and some time later returned to it to see if it would support a move north.
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I went LONG on the return to this area at 1.5707.
This was a fairly safe trade although with WR1 above it was never going to make a lot of pips.
My STOP at 1.5738 was hit as expected but it was still worth 31 pips.
Price action at WR1 wasn’t conclusive so a SHORT at 1.570 looked questionable so I stayed out of this market preferring to wait until we see what tomorrow brings.
Construction PMI is up tomorrow so I’ll post my analysis some time after 09:30.
Ashampoo� Snap Web Upload
Construction PMI missed (61.1 Expected 59.4 Actual) which has only had a minor effect on GBP/USD suggesting the BULLS are largely in control over the mid-term.
Shorter time frames suggest 1.5756 (WR1) is the first target today for GBP BULLS from 1.5707 where we are now but this is not tradeable as todays open and Monthly Pivot stand in the way.
GBP may wander between 1.5679 and 1.5756 (WR1 and W. Pivot) but as long as price holds above the 200 sma on the 1H chart the BULLS will have the edge.
I’m looking for a break of 1.5763 (yesterdays high/WR1).
If we get that and a return to this area to test for support I’ll be looking for LONGS but I expect prices to be somewhat directionless as we wait to see what FOMC Member Fischer says at 13:10 and Fed Chair Yellen come out with at 13:30 so its watch this space until then.
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Yesterday GBP sold off steadily down to 1.5631 but the critical low at 1.5590 stayed intact.
The 3rd set of PMI numbers released at 09:30 (Services) exceeded anticipation (56.6 exp 58.6 act) which has mildly boosted GBP BULLS and the 5m chart suggest the sma’s are spreading north.
I’ve decided to go LONG at 1.5654 with a STOP below yesterdays low at 1.5630 for a 24 pip risk.
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12:30 see the Autumn Forecast Statement which may or may not influence GBP followed by ADP Non-Farm Numbers at 13:15 and ISM at 15:00 out of the USA which will almost certainly influence matters.
I need to get this trade to break even as soon as possible and hope GBP isn’t crushed by news later.
Tightening STOP on GBP/USD LONG from 1.5654 to 1.5638 for -16 pip risk.
