I have been posting recently on the 88.6% fibonacci retracement level. It is a less common number than the widely used retracement levels of 38.2%, 50.0% and 61.8%. Nonetheless, this 88.6% holds a better risk/reward ratio. For GBPUSD, last friday’s downward move retraces near to the 88.6% of 1.6000.
If there are no significant gaps on monday opening, i am planning to go long. Stop loss is below the previous swing low of 1.5975.
Long near 1.6000-10
Stop loss below 1.5750-60
First target profit 1.6100
Second target profit 1.6180
Indian stocks were trading partially lower amongst movements, considered down by auto, metals and capital goods stocks. However, the rise in technology, private banks and healthcare stocks has limited the downside.
I have been turning my attention to FIBO recently. So i went searching for all things FIBO related to trading. Here is a short summary of FIBO summation series.
Start with 1, then add the previous number together to form the next number. Continue to combine the previous number with the new number to get the FIBO numbers. Therefore,
Besides using FIBO to find potential retracement levels, FIBO numbers could be used to time the possible dates for markets to turn. This means market could turn at either day 5, day 8, day 13 and etc. Although it is not precise and may not turn at the exact day, most often it turns close enough to the FIBO numbers. Making it hard to ignore this as a coincidence. This could be a useful strategy to time market turning points.
Look at the EURUSD daily chart. Note that price peaks at 1.3170 on 13th Sept, which is the week after the announcements of ECB OMT and FED QE3. It is used as the starting point for the calculations.
Watch for day 34. This is the next FIBO number. Because it is not exactly precise but a good estimate, watch for it to possibly turn from day 33 to 35.
EURUSD is currently resisted by another super long term trendline on the daily. Point 3 of the falling channel was touched last week.
Will EURUSD break above this down trendline? To answer that, lets take a closer look. Lets see the price action on the 4hr chart. There are 2 possible ways to analyze the 4hr chart.
For the bullish traders, EURUSD is in a symmetrical triangle. Symmetrical triangles are usually continuation patterns. Since the trend is up, the bullish traders will want to try bring EURUSD above and outside triangle. Thereby causing the bullish trend to continue.
For the bearish traders, they will try to cause a double top pattern to invalidate the triangle pattern. Since double tops are key reversal patterns, EURUSD should drop like a rock.
My personal preference is to trade the triangle continuation pattern. I am of the bullish side. I think the temptation is there for Spain to take the easy way out. Politicians are not known for their long-sightedness.
For this post, i am going to ask you to guess the timeframe for these 2 charts. The time and price has been removed from the charts. This post is to show the fractal geometric nature of the markets. Chart patterns that repeat itself on all time frames, from the largest to the smallest.
U.S. stocks closed higher Monday, as investors await the outcome of an uncertain U.S. presidential election.
Indian shares gained somewhat strength amid choppy trade and weak Asian cues.
All three indices shifted down between 2.1% and 2.6% for the weeks time. For both the Dow and S&P 500, it was the toughest every week amount fall, since the weeks time finishing July 1. Still, shares stay up between 5% and 11% for the year.
The BSE Sensex started out flat to positive on Monday after a fall in six successive trading sessions, assisted by technology, banks and telecom shares. Asian markets ongoing to trade combined amongst wants solution to US financial problems.
There is nothing new under the sun. The sun rises from the east and sets in the west. Everyday, yesterday and tomorrow. The sun has been rising and setting long before we are born, and it shall continue to do so long after we are gone. There is nothing new under the sun. In the financial markets, there is nothing new at all too. Booms followed by busts. Exuberance comes before a panic. Greed turns into fear when prices tanked. These are nothing new. It is ancient wisdom. This is a key to financial riches. Buy before the boom begins and sell before the bust comes.
GBPUSD has been doing nothing new at all too. The last time it trended strongly was during the 2008 global financial crisis. Where prices drop a whopping -6500pips. Ever since then, it has been trading up and down within well-defined ranges since 2009. I have taken a daily chart and zoomed it out to the max. This allows me to have a bird-eyes view, or a big picture, of the technical situation of GBPUSD. What i found amazes me. Look how well behaved GBPUSD is, since the 2008-2009 global financial crisis!! It has not ventured into any new price territory. It has been meandering about in such precise boundaries, that i can draw nice boxes around the price action.
The 2008-2009 freefall of -6500pips is like a Yangtze river bursting its dams and causing a huge flood. From 2009 until now, it is now a calm, serene, predictable flow of river.
So how do we trade this? The million dollar question in every forex traders’ head. The strategy is then to short at the top of the range. And to long near the bottom of the range. Right now, GBPUSD is approaching the top of range at around 1.5750. See the chart below. I have place my sell orders around 1.5750-60. If this 1.4800-1.5750 is the new defined box, then we could be ranging inside here for many months ahead.
SHORT GBPUSD 1.5750-60
SL above 1.5800
TP (final target) 1.4800
