G/U has pushed down and is moving away from session lows but there’s no real impetus.
1.5567 is the weekly Pivot that G/U will have to take out to make progress north but my guess would be a rejection at this level.
1.5484 remains important as this opens 1.5298.
Daily Chart
I’d rather be a seller than a buyer in this market but lack of volumes make this a gamble I’m not prepared to take.
I may look to SELL at 1.5584 depending on price action.
Yesterday I suggested 1.5580 area was a possible trading opportunity as this was a resistance area that coincided with the Weekly Pivot and 200 sma on the 1H chart.
We’re at 1.5580 now so the question is will GBP turn south here under the weight of BEAR pressure or will it punch through this area and head for WR1 key resistance.
Mondays high was 1.5585 and we need to see this level removed before we can look for LONG trades on a pullback and hold above 1.5565/70.
The Weekly Pivot looks to hold the key. For BULLS if price returns to W.P. and fail to break then we can go LONG. If however price breaks through W.P. and fails to break this level on a re-tests then SHORTS will come into play.
If we meet the conditions above I’ll make a post.
GBP/USD has pushed past this weeks high and is retreating back to relieve overbought conditions.
Should the price make it down to 1.5567 area I’LL go LONG with a STOP at 1.5545.
If G/U breaks through 1.5567 and moves away from it on a retrace then I’ll go SHORT with a STOP at 1.5590.
Yesterday’s trade LONG from 1.5567 made no real progress and failed at 1.5594 so I exited at break even.
Overnight cable gapped on open and weak Manufacturing PMI numbers (53.7 exp. 52.5 act) has done little to lift the mood.
The price has crashed through WS1 and has halted at Monthly S1.
I’ve gone LONG here at 1.5450 with a STOP below MS1 at 1.5440 for a 10 pip risk.
With oversold conditions on RSI on several time frames there’s every chance BULLS will be entering this market but as we’ve now taken out 1.5486 we must consider GBP to heading lower and our long range target at 1.5298 is now in focus but probably not for a few weeks yet.
So in the short time GBP may rally back north and attempt to close the gap at 1.5567.
I shall move this trade to break even as soon as possible as with thin trading volumes there’s always the possibility of spikey trades and sudden price movements.
On Friday I suggested that following GBP’s gap open there may be an attempt to close this gap.
1.5449 was the price of G/U at the time of writing and I had gone LONG with a tight 10 pip STOP.
Rather than attempt to close this gap GBP collapsed dramatically. Although there was some negative news last Friday his hard to justify GBP’s collapse from 1.5447 to 1.5331 and subsequent collapse further on open to 1.5186 although traders being away from desks and thin volumes no doubt contributed.
Its a lesson in how important STOPS are when trading particularly during holidays.
So where to from here?
On the WEEKLY charts the area around 1.5265 has been significant and supportive and is also the 23.6 Fib. GBP has broken this level but is now trading around it.
If BUYERS are still interested in this level then GBP could make a move north from here.
OVERSOLD conditions on the higher time frames make SHORTs from here look risky although the significant WS1 is now at 1.5103 and that may be a target.
The spike down at 1.5181 will be significant. A break would open the door to WS1 at 1.5103.
The 200sma on the 1m chart sits at 1.5293 though this is moving down.
If the price of G/U can take out the 200 sma and stay then I’ll look for LONGS.
If 1.5181 breaks I may look to SHORT but I prefer a bounce.
G/U has slid down to 1.52 and is entering a significant area.
The 200 sma on the 1m chart is now in reach at 1.5229.
Price will either be rejected here or it will move through this barrier and hopefully return to it to test it for support and move away triggering our LONG.
If that support holds we can go LONG with a STOP under the pullback low at 1.5202.
The higher time frames are moving out of oversold suggesting 1.5229 is going to be attacked.
The next 30 minutes should be interesting.
Price has fulfilled the conditions of the trade in breaking through the 200 sma and returning to it to test for support.
I’m LONG from 1.5232 with a STOP at 1.5220 for a 12 pip risk.
I’m expecting this trade to make 1.5277 where the 200 sma on the 5m chart lies where stiff resistance will be found.
That said, I shall get this trade to b/e as soon as possible due to the fragile state of GBP/USD which will sell off on even the suggestion of adverse news.
I’ve moved this trade to break even as we approach the first real test - the 200 sma on the 5m chart.
There’s nice support below from the 100 50 and 25 sma’s so although price will retreat from 1.5263 it may only be a temporary respite before the BULLS push higher.
Time will tell over the next hour.
Yesterday I suggested that my LONG from 1.5237 may meet resistance in the 1.5263 area. Price made it to 1.5270 initially and as expected was turned back by the BEARS. On the second attempt the BULLS pushed to 1.5273 but were sent south again. The third attempt to break this area of resistance made 1.5270 again but this proved to be the BULLS last hurrah and on this third failure the BEARS took their chance and drove the price right back to 1.5213 which cleared out my STOP at just better than break even.
So where does this leave us?
Its clear that GBP BULLS are going to struggle in the current climate.
The Services PMI may offer some salvation to GBP BULLS but a miss may send GBP heading for the relative safety of WS1 and Monthly S3 where strong support will sit (1.5103).
A better than expected print should see the BULLS make another attempt to take out the 1.5270 area.
So for the next 8 minutes we wait and see what the Services PMI numbers bring.
Services PMI expected 58.9 actual 55.8
Not good news for GBP BULLS.
There’s clear daylight below 1.5202 and there seems to be little to stop GBP descending to the next area of support at 1.5103.
Oversold conditions however mean we cannot SHORT from these levels as the risk of a pull back is considerable and you would need a large STOP to accommodate any potential pullback if it comes.
The safest option is to wait and see what happens when the 200 sma on the 1m chart meets the price or vice versa.
Its inevitable that the price will meet the 200 sma over the next few hours. At that point we will have to decide if the 200 sma is going to reject the price and send GBP off to 1.5103 support giving us an entry with an easy SHORT with a tight STOP above the 200 sma or whether the price can break the 200 sma return to it and move away again giving us an easy entry LONG with a tight STOP. below the 200 sma.
GBP/USd has arrived at the 1m 200 sma and we need to see if this line is going to hold or break.
Ideally for BULLS a positive break of the 200sma followed by a return to test and push north is what we are looking for.
We also need to see all the sma’s tighten then the orange 25 sma cross above the black 200 sma and start to spread upwards.
That hasn’t happened yet but the overall picture is one of a minor GBP recovery rather than more selling but with the markets so fragile anything could happen.
I shall only look to SHORT below 1.5174.
Following yesterdays dismal Services PMI numbers I posted:
There’s clear daylight below 1.5202 and there seems to be little to stop GBP descending to the next area of support at 1.5103.
Although it looked very likely GBP was heading to this area a bounce could not have been ruled out before it got there so I suggested waiting to see what happened when the price hit the 200 sma on the 1m time frame.
In an ideal world this barrier would have either been cleanly broken or cleanly bounced off.
Unfortunately we had a criss crossing of this line before price did indeed start to move south.
Below 1.5174 I stated I was looking for SHORTS but the picture was too uncertain to trade so I left it alone.
Yesterdays low at 1.5113 was 10 pips above our optimal entry.
The position looks LONG from here supported by the WS1 and MS3 pivots but I believe we may see another leg lower to test 1.5103 WS1 pivot and 1.5100 big number.
If the price clears the 200 sma on the 5m chart at 1.5152 and holds above I’ll look to go LONG but I much prefer a test of 1.5102 for a better entry.
GBP/USD has reached our desired target at WS1 (1.5103) and I’m LONG from 1.5110 with a STOP below WS1 at 1.5090 for a 20 pip risk.
I’ll get this trade to break even a.s.a.p. as GBP is still in a downtrend and these retraces can be short lived.
A 20 pip loss on today’s trade as WS1 eventually succumbed to relentless GBP selling on the back of dollar strength helped by todays Trade Balance print which came in above expectation.
GBP now stands at a critical junction.
There’s possible trendline support coming in at about 1.5035 though this line is difficult to determine and maybe 10+ pips either side of this guess.
I think if we get down to 1.5020 then we can safely say that this trendline has not been confirmed and we can expect GBP to head much lower probably to 1.48 area where we’ve bounced previously.
All in all it looks pretty bleak for GBP BULLS and we have yet to have a significant pullback to enter SHORT.
GBP/USD is becoming very difficult to trade with such excessive oversold conditions and the potential for a substantial retrace possible at any time.
Best look to other pairs currently.
Yesterday I highlighted a potential trendline that may offer some support for beleaguered cable though to be fair its a long shot.
I thought the line came in at about 1.5035 and currently we are seeing an extremely tentative bounce off 1.5033 but its far too early to see if this bounce is meaningful but like all bounces/retraces, they have to start somewhere.
I think its far more likely we are heading towards 1.4815 over the next few weeks although the 1.5000 psychological level may come into play.
There is a herd mentality in trading which I’ll discuss on my website under harmonics. Harmonics are a key factor in understanding the herd mentality of traders and 1.5000 is a level that BUYERS will expect other traders to place LONG positions so its almost inevitable that when/if we hit 1.5000 the price will bounce but how far we bounce depends much on fundamentals and the strength of the USD.
For now though we wait until 12:00 GMT for the official bank rate which will remain unchanged at .50% and any accompanying MPC statement.
At 13:30 we have the USD Unemployment numbers and of course tomorrow the hugely significant Non-Farm Employment Change and Unemployment Rate.
Staying on the sidelines is advised until then although if we break and hold above the 200 sma on the 1m time frame I may look to put a small LONG at about 1.5060 with a STOP at 1.5030 if we get some positive price action.
LONG from here 1.5061.
STOP 1.5030
31 pip risk.
Lower time frames are turning BULLISH. This is worth a try but its a trade that will have to be watched and I’ll be exiting at the first sign of weakness on the 1m charts and moving my STOP to b/e at the first opportunity.
Moving my STOP on this trade to 1.5041 as we are approaching 13:30 and the release of market moving news out of the USA.
If the Unemployment Claims miss their 291k target then this trade should make progress.
If the numbers exceed expectation then this trade will be dead and I’ll be losing 20 pips.
The Unemployment Claims came in more or less as expected so no damage done.
I’m moving the STOP on this trade to 1.5050 which is just below yesterdays low so my risk now stands at 11 pips.
1.5082 is the first real hurdle - this is the 200 sma on the 5m chart.
STOP now break even
