Cable conundrum

[Mercury]

While the stock indices and Oil are sorting themselves out I was looking at GBPUSD cross and have come to an impasse.  Overall my assessment is that the market is in retrace prior to a final leg down, maybe as far as past lows (13455ish).  But where are we now and what will happen next?

 

On the one hand the retrace could have concluded on 18 March and be in the final run down with a W1-2 about to conclude.  On the other the current move could be an A-B (concluded) and just moved in to a Wc up.  The Daily chart seems to indicate the latter with Stochastic supporting a Wb conclusion with a nice "Junction" at 14690ish.  I call a confluence of 2 or more resistance lines a junction (there are 3 here).

 

On the hourly it is looking like a short term fall is happening, maybe a W1 of Wc up (we should now get a drop back to a suitable Fib retrace before the main surge up if true).

 

Anyone got a view on where Cable will go short term and longer term?

 

Here are my charts:



[donaldprice]

Was also keeping a very close eye on this, but now yellen speech is over, 61% retracement has just been passed, it did appear that this could have been a good short opportunity, never mind, be interesting to see if this surpases 145 area again. 

[Mercury]

Can't tell which way this is going yet so I'll be waiting to see if we get a retrace followed by a rally or a major turn.  Will be tricky to judge.

[Guest Rich88]

250+ point rally since Monday, 14400 Looks A Good Short?

[Mercury]

Is Cable forming a nice A-B-C retrace to a W4 of Wc?  I have a short term swing Short att 14450, looking to exit at the Fib 50% ish and reverse but what I really want is the end of the larger A-B-C as the final leg down could go all the way to 13500ish.

 

Similarly, if the Euro is about to turn down and the GBP will come on strong again then EURGBP could be worth a Short (if it doesn't make a higher high that is...

 

hourly chart:



[Guest Rich88]

I'm keen to get short at 14400, but going to wait till after nfp just incase we pop back to 14450

[Mercury]

I think we are more likely to get a Long opportunity in or around NFP but let's see.  Probably a wise idea to wait and see which way it breaks.

[Mercury]

GBP is weak against USD, EUR and AUD.  So surely can't just be about NFP and US rate rises?  Backdrop of Brexit and trade deficit may be bigger long term factors?  I have heard some people talking about GBPUSD parity recently (quotes like a return to "bad 'ol 1984 days").  My thinking is it will surely go down but I'm not sure how far yet.  Also not sure if now is the time for a turn but it sure looks like it.  I was thinking to I'd cash my cheeky short from 14450 level on Wednesday but now considering just holding it stop protected until NFP is done with.  Even if I get stopped out there will always be another opportunity and soon.

[Mercury]

PS: EURGBP just made a higher high so I'm thinking that will continue up for a bit to a decent resistance area before concluding the rally.  GBPAUD is heading for lower lows, unless it turns at the current 88% Fib level, not a high likelihood in my view.

 

For a while at least it looks like GBP is heading down across the board.

[Guest Rich88]

Looking for a rise and then back down?

[Mercury]

That's my reading of it too.  Fib 50% maybe?  At any rate somewhere between 14300-350 I'd guess.

[Guest Rich88]

Just bounced off 14180, if we hold we could go back to 14250 - 14300 next couple of sessions

[Guest Condor]

wondering if  Trendline could see drift down to region of 13800 heading into Brexit date.

Possible Option =Quarterly PUT 13800 ( 15th June  - week before )

[Mercury]

For me the picture on Cable is unclear.  This is not surprising as it appears to be in a Wave 4 Triangle (big picture), which typically exhibits a lot of whipsaw action and that is certainly what we are getting with this one.  Very hard to trade so I have been looking for better markets.

 

That said, I do feel we may be coming to an end of this action and some clarification may emerge soon.  For now it could go either way but if I had to make a prediction I'd say we probably get a higher high to complete a 1-5 up in Wave C to complete W2 and then a drop to the bottom.  Can't rule out that we have already had the W2 and am short at the last turn SP at B/B.

 

Let's see...

 

Charts:

 

[Mercury]

BTW, forgot to mention, though I'm sure it's obvious to you guys, if the price breaks the 76% Fib (yellow line on my Hourly) and plummets on down to break thee previous low at 14055 (24 Mar) then scenario 2 is in play and we have seen the W4 turn and are on the way down.  This is why I took a Short at the last top.

[Guest Rich88]

I definitely favor selling rallys, but by god don't they come strong!

[Mercury]

I'm almost certain GBPUSD is on a drop to the long term bottom now, why?  Well the market dropped hard through the 76% Fib and closed below it on he hourly chart.  For EW aficionados this means the green labels 1-2-3-4 on my previously posted chart cannot be right because W4 cannot exceed W1 terminus.  Therefore the most likely scenario is an A-B-C completion to a W2 (green label) of W3 down.  I still won't be 100% on this scenario until we get a close below 14055 but it is looking more and more likely.

 

Updated hourly chart:



[Guest oilfxpro]

too  ooversold too much support to sell

[Guest Condor]

Well I've Bought the Option I mentioned earlier..

Option =Quarterly PUT 13800 ( 15th June  - week before Brexit).

 

[Mercury]

Cable conundrum has been resolved for me with a break of resistance line at 14050, which is also a new lower low.  I do except a retrace rally at some point but I am now convinced the GBP is on the way down to the bottom of the market now.

 

Will be interesting to see how long EUR can resist and how fast it will go when it turns...

 

Chart:



[Mercury]

The more I look at this move the more I like the drop through scenario that caseynotes suggested.

[Mercury]

Yeah, it's a 50/50 for me at this point because a retrace could easily happen but that would also be a good chance to sell the rally.  Also I have the Euro rallying (could also drop of course) and the EURGBP nearly hitting a turning point so it those are right then the GBP must rally.  Waiting this one out for now.

[Mercury]

"Betty Grable"! like it!

 

I had thought we could get a strong retrace on this one, also similar on EURUSD.  I am not sure if it is finished either but, as you intimate, if price breaks 14050 (and recent lows) again then a bigger drop is on the cards.

 

For now I think we could get a classic A-B-C but with the C not going that much higher than the recent highs.  Eur will probably go higher in this scenario and give us that hit at 8130 on EURGBP.

 

Best to wait and see which happens in my view and then act accordingly.  I am only interested in shorting all these markets.

 

Chart:



[Mercury]

LOL!  Of course.  Wouldn't dream of telling you want to do, just saying what I plan to do and why and then seeing if people agree or disagree.  Clearly I am targeting pivotal moments (like this mornings move on the FTSE) to take positions that will be held for days or weeks rather than intraday but I guess we'd all like to have a view on where the market is heading regardless of method of trading no?

[Mercury]

Big LOL!  Well I'm glad you are finding my rabbiting useful, even if just for longer term perspective.  Like most people I'm sure, I'm wrong more often than not with my trading and need help and input, especially to stop me getting in prematurely and you shorter term traders can surely help with that, but when I'm wrong on analysis I often find it is because I missed something (like Oil yesterday).  It's a work in progress that will never be perfected...

[Guest Rich88]

Looking for a retrace back to 14150 then down again?

[Mercury]

Possible if that proves to be a line of resistance, for which there is some argument, however if it does retrace I'm expecting 14200 to be reached, which is 62% Fib.  Worth watching the EURUSD cross as well, I think they may well both turn down together.

[Mercury]

Yeah I take 14180 as it is within the margin of error for the Fib 62% at 14200.  I do think that if the price doesn't retrace to a suitable level and falls from here below the 14050 level (or recent low) then a big move down can be almost assured, and it could go quite fast.  I have a stop in Short order just below the recent lows to catch that but I'm hoping for the retrace as a better entry point.

[Mercury]

Yeah it's not the only market to do that either, especially around big data releases.  That's why I like to use stop in orders placed at strategic locations.  Will be interesting to follow this EUR/USD/GBP triumvirate over the next day or so...  I think there are good Short  trades brewing on all 3.

[Guest Rich88]

April is a good month for the gbp/usd