The fate of GBPUSD. Please Help a worried soul

Trading Discussion
1

What is the fate of GBPUSD now? I mean it looks highly oversold at the moment. Can we expect a bounce back in this coming week? My EA started buying it when it was 1.7150 and since than the EA is doubling the trades and now I have like 2000 USD draw down. What you think guys will it be bullish anytime soon?

Right now I have about 3800 USD free margin and my last opened position volume was 0.33 (Leverage 1:500). My EA started opening buy trades from 0.01 then 0.03, 0.06, 0.09, 0.15, 0.21, 0.27 and lastly 0.33 and after that I stopped EA from opening further trades by disabling it.

Now the pair is started to behave bullish but what I read on other sites that this bullish trend is possibly temporary and the pair is expected go down further. What do you guys think what is the maximum lowest it can go and when a pull back to bullish trend is expected. Below is screenshot I took:

Direct link to large clear screenshot: http://oi60.tinypic.com/xpa7g1.jpg

Please help. I am worried! Shall I add more money in my account or will my account survive itself!

2

Everything I see on the cable is undecided at the moment. I think it’s at it’s biggest losing streak for quite some time. Stalling out right now, next weeks announcements will have an effect. CPI and such are coming up. Interest rate announcements. I personally would remain short. But with a stop loss around 100 pips. A temporary trend reversal might stop you out but it’s better than letting it just go in case the worst happens. You can always re-enter a short later.
Just my opinion and how I would manage my trade if I was in your shoes. I don’t use your EA tho so you know it better than me. Is this a large drawdown for it? Has it been in this situation before? Maybe turn it off for a week and let it cool down.
Overall, I’d stay short. News announcements coinciding with a strong bounce back up would be enough for me to cut my losses. I’m not a moving average guy but I do know it’s trying to build itself above it’s 200 sma. Another self fullfilling prophecy sometimes.

3

Just saw you were long on all those trades! My mistake. That’s a tough one bud. Disregard my last post then. Personally I think it is a very bad time to be long on the pound or euro. I’d cancel everything and live another day. But hey, just my opinion

4

Kashif,

I am in your shoes 3 months or so ago. I hold my Aussie trade short for more than a month and I was in a drawdown as well. I decided to closed that Aussie because I am not sure if I will be able to atleast break even or at a minimal lose. I closed it for about 250 pip loss (maybe more than that) and it took me more than a month to gain it back. Good thing is my position size is not as much as you have right now and I was able to take a trade or 2 to help bring back what I have lose. If I were you, determine where you can exit out either now or wait out a few more days. It’s up to you. Accept the lose and learn from it then moved on. There are more opportunities ahead. You will experience something like this again but hopefully you figure it out what went wrong and hopefully next time it will minimize some of this…

[B]Live and Learn…[/B]

5

I’d say that the EA is a trend follower, probably based on the daily close.

If so then there is the first place to to go.

If you decide to bail then it is important to plan your exit, look at numbers like 6750 and 6780.

Think like a market maker, where are there ‘missed’ orders, if it is an exit strategy then doesn’t really matter which direction those orders may have been.

There are 3 numbers days that MM’s will use this week, Monday will likely be quiet (geo political risk aside), so it is not necessary to act on impulse.

There are likely to be few shocks this week, cpi may set a tone, the vote count risk is to the upside only and retail sales are likely to be reasonably safe.

I used to watch a UK TV series called ‘Dad’s Army’, the corporal would shout “don’t panic, don’t panic”.

6

Here is one very fresh article on the subject

Good luck with your trades :wink:

7

PipMe, have you had a look at the seasonal trend for GBP for the remainder of this year yet.

I know you may be short, but was just wondering if you follow the seasonals.

8


Hi Peterma, thank you. As you can see in the data,
market volaitility for the past twenty years shows that this and the next month have one of the most active moves… Holiday period coincides with less liquidity and, therefore, more volatility… The return from the holiday season could see a very liquid AND volatile September, which could very much pick up an Augustine move and put further weight behind it: in other words, seasonality for the Pound at this point means strong moves, although nobody knows whether up or down (we do not do clairvoyance in Forex) xx

9

Lol, I’m not into that clairvoyance stuff either, (now having said that immediately a certain Mr Ghann sprung to mind, but maybe that’s a different story).

The vix is good, but I was thinking more of direction.

In truth I am a big believer in the now, but maybe of interest to those who look behind, GBP would usually fall until around Aug 26, then the words of Yazz apply, until the first week of Nov.

Then a little drop and back again in mid Dec - data applies seasonal patterns 1982 (ah I remember it well) to 2011.

Must get the next 2 years. :slight_smile:

10

One addendum to the above for those who prefer to live in the now, the seasonal tendency has changed dramatically when you compare the 5yr tendency vs the 15yr and 30yr (surprise, surprise).

The older 2 agree with Yazz whereas the 5 yr says from the first week of Nov the only way is down.

11

Hi Peterma… I was watching Gov. Carney’s inflation report press conference from Wednesday… Sorry, who is ‘Yazz’? I do not know much about seasonality as a science…

12

Hey Kashif, sorry about your position. I think a rally will come, but it will take awhile to reach close to that 1,7150 level.

My advice would be to take the loss. Here´s why.

Based on the movement of the GBP USD, it usually moves in waves of 400 Pips. Based on this value, unfortunately your entry price was close to the start of a new bearish wave to its next target. This would be at the 1,6790 which the market is below right now. This chart was taken a few days back.

GBP USD- DAILY CHART


Given these 400 Pip waves and the fact that we could be starting a new trend, 2 things could happen.

  1. We could see the market move sideways here or perhaps pullback before resuming the downtrend for more USD gains toward the next 400 Pip target (Weekly Range) at the 1,6400 area.


  1. It could actually give a strong Daily Bullish Signal to start a large Range Formation. This would take it back up to your opening price area which would become the Resistance of this Range and recoup losses.


The uncertainty however, is that one may not know immediately whether a bullish signal that appears now will start this Range or be a temporary pullback before continuing bearish.

My advice is to close out now and slowly recover when the market shows very convincing signs of continuing bearish or reversing bullish.

13

This can be a great learning example for you and teach you a lot about changes you may need to make to your trading plan.

An expensive example, but necessary nonetheless.

You’re clearly over-leveraged right now and not trading according to a pre-determined plan. That’s learning experience 1 and 2.

Unfortunately, this is exactly how accounts are blown: over-leveraging yourself, adding to losing positions and “hoping” for it to “turn around” (learning experience #3).

It’s important to really rely on yourself and not take the opinions of others as face value. No one can be accurate 100% of the time, and the 1 time you take someone’s advice can be one the time they’re “wrong”. Important to understand that the markets are deep, and filled with thousands upon thousands of conflicting ideas on where price is heading.

I’ve always argued that when major brokerages are touting bullishness associated w/ a single currency, you need to be looking @ the opposite end of that recommendation and searching out opportunities to sell.

I’ll share my Weekly chart though- not that it’s going to change anything, but, it may provide a unique viewpoint- one which you may not have been exposed to before and that may help you consider alternative scenarios.

GBP W1 8.16.jpg700×346 31.3 KB

Weekly chart in HD

High-level, tech overview:
An exhaustion candle was printed @ the peak of a bull market.
The pair recently violated an ascending wedge structure. Volume supported the break.
Price closed beneath the W1 20 EMA for the first time in over a year.
Price trading @ the 236FIB level, also the swing high from Q2 2011.
Stochastics pulling down hard into oversold levels.

Is this move a mere necessary correction, coupled/ w some profit taking and potential geo-politically fueled rush to the USD?

Bottom line, bull “trends” are @ risk of ending (reversing) when the swing low which created the most recent swing high is taken out (i.e. a lower low is printed). The pair could trade sideways above that 236FIB level for 6 weeks. Or, it could take it out w/ ease come next session open, and open up the potential for a test @ 1.6280.

If bulls want to regain control here, they’ll need to stop the bleeding, and print a strong close above the 20EMA. In my opinion, there will be 2 remaining key breaches required: resistance in the form of the descending trendline and the swing point origin of this current leg down. Clear those, and the markup will resume.

Potential signs that we’re headed for lower prices: If bears can take out 1.6625, they’ll be looking for a retest of 1.6280 (382FIB and blatantly obvious prior structural resistance level. Also- a supporting TL checks in around this zone. Couple that with OS stochastics and you may see a bounce.

Jake

14

Hello to the OP…

You said that you run an EA, which is an automated system,

therefore you are not guilty of ‘hoping’ or being ‘emotional’,

but, in fact, you are simply trying to manage a mechanised

context that has run out of control… Sadly, nobody knows

what will ‘happen to the Pound’, and although you and us

all have our own clever (or not so clever) chart analyses

and biases, in the end it comes down to risk management,

which means making decisions like those that you are trying

to make right now…

As Jake, PipNRoll, and others before me have said, it may be

harder but ultimately better for you to take a loss now…There is,

however, one alternative: close part of the trades (e.g. if your trades

were 5k each, you could close them for, say, 1k each, thus keeping

them open for 4k and only taking the 1k loss on each trade), and see

how much available margin that would leave you with. For example,

I recently did the same with a EUR/GBP long position, where I entered

for a long-term trade last month at 14k: while I watched it dipping over

100 pips against me, I was obliged to slice off 4k from it, thus taking a

loss, but instead of stopping the trade I let it run its course; as you may

know, and against most advice/expectation, this pair had a major turn around

and my trade has now come to break-even. Being that I had decided that this

would be a long-term trade worth many hundreds of pips, seeing it go under by

one hundred pips did not concern me: however, I actively managed the trade when

I realised that the amount I had chosen was too ambitious in terms of risk in the

event of a move in negative territory of over 100 pips.

So you do have more than one choice, and if you can let the trades run longer then

so be it…If, however, your EA malfunctioned (did it have stops in place?), then you

may not want to sit on these trades… It may even be the case that you will want to

reprogramme, or have someone else reprogramme, your EA, so that further conditions

will have to be met before orders will be triggered…

Best of luck, and keep us posted.

15

Seasonality in the futures is valid largely because there is usually a commercial reason for the phenomenon.

In GBP case for either Sep or Dec contract the 50yr, 15yr, and 5yr pattern is a steady rise from early July, that rise peaking in early August, the pattern then is that price declines until the last week of August.

At that time the 5yr pattern is for a levelling off in Sep, the others steadily rise, again all 3 rise in October and peaking at the end of the first week Nov.

Remainder of Nov the 5, 15 and 50 year pattern again agree on a decline, with the 5yr pattern continuing to decline in Dec.

Source MRCI.

Re Yazz, forgot that everyone isn’t as old as me :

The Only Way Is Up - Wikipedia, the free encyclopedia

16

GBP has gapped up to above 1.67 so it looks like it’s posed for a strong week. I’d say if it can stay above 1.67 for the next 24 hours, put your SL below 1.67 and take your loss at the end of the week.

17

The 0.50% Fib retracement of the 2008 high to 2009 low has been tested as resistance in 2009 and in 2011; since last week, this level (around 1.6677) has become support… However, it may or may not hold, therefore the jury on a GBP ‘bounce’ is still out.

Cheers.

18

Agreed. It’s sit on your hands time. British Pound Heads into Critical Week - Could it Finally Bounce?

19

Re Yazz, forgot that everyone isn’t as old as me :

The Only Way Is Up - Wikipedia, the free encyclopedia[/QUOTE]

[B]
Ha… I knew the song but could never remember who it was by… Yazz and the Plastic Population…

Plastic Fantastic …

:slight_smile:
[/B]

20

A must-see: