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Cable conundrum

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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:



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GBPUSD short term.

Bulls really struggling to take 14300, may see a re-test of 14200 but Yellen speaks in a few minutes so ?

 



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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. 

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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.

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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:



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

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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.

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Cable threw a not unusual tantrum on the short term charts this afternoon (50 ema horizontal while price leaped up and down 50 pip all afternoon), will probably sulk now till NFP. Lots of commentators saying expecting decreased volitility all round on NFP release due to ever decreasing expectation of a US rate hike anytime soon (no matter what NFP figure). 

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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.

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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.

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

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Cable looking again at major support from the weekly chart (14180). As  said, main driver probably Brexit polls.

 



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

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

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

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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:

 

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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.

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

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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:



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

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

 

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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:



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

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Just got stopped out for a small loss, may have moved my stop down too early.

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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.

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Blasted Betty Grable is having another look at 14050. Having made a fool of me yesterday she is now trying to offer me up seconds.

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"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:



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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?

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