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Cable conundrum


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 I really enjoy and take note of all your posts, of course we all trade differently and someone with info on a longer term view to my own I find invaluable. Helps to complete the picture.

 

That's an actual selfie by the way.

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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...

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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.

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The 14050 level lost it's credibility somewhat yesterday. The big level above is 14180 from the weekly chart and below is 13770 from the monthly chart but of course 14000 (yesterdays LOD) stands in the way. Cable often correlates with eurodollar unless it's having one of it's 'funny turns'.

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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.

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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.

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Well it is tax year end so maybe a lot of people are selling shared to crystallise losses or utilise capital gains and repatriating into GBP.  Still you know the old saying - "lies, **** lines and statistics"...

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Market is at my 62% Fib and congestion zone showing an A-B-C formation and good indicator support for a Short.  Have taken Short at the Fib 62.

 

PS: also too a short on EURUSD at top of Triangle and EURGBP is motoring down now, all good.

 

Just need indices and Oil to join the party...

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Like I said previously, these policy decisions usually get leaked to soften the ground.  "BoE MPC does nothing shocker!"  Can't see that as a headline can you?  Votes for cut isn't much either, more interesting would be whether anyone separates from the pack to call for a hike, now that might set the hares running.  1 woundn't but 2 or 3...?

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So BoE MPC does nothing.  Shocker!  Not!  And market reaction?  Baa humbug!  So far at least.  If it drops from here it is another example of what is wrong with the market right now.  It needs constant central bank stim to keep going and so far they have been obliging but how long can this travesty go on?  Free markets?  Yer avin a laugh!

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Seriously though, with a presidential election in the US and Brexit here in the UK I can't see any political air cover for helicopter money, I mean can you imagine what Donald and Bernie would do with that?  Talk about a vote winner!  Here it put into question the whole Brexit argument, isn't this the kind of thing the Brits want to avoid with the ECB?  And in Europe the Germans are already rattling Draghi's cage on what is is already doing and saying, no way they support Helicopter money!  Japan might but so what?

 

No I think we have come to the end of the central banker road, even QE 4 in the US would cause a problem and no way we can consider NIRP in the UK or US, it would be the end of the World as we know it.

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Then the politicians and big corp will just have to take over and offer up their solution of mass influx of cheap labour to give the econ a kick start. George Soros declared a few days ago a need for quota annual mass migration into Europe.

It seems what must be avoided at all costs is a natural correction with it's inevitable cutting away of the dead wood which would allow room for growth of the new and innovative. 

The old boys are still hang on by their fingertips.

At least we don't have to listen to the Krugman post Keynesian drivel anymore as surely everyone can see that hasn't worked by now. Though he was in Japan recently telling them they were not doing enough.

 

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PS: I totally agree with quotas for immigration in Europe, this is not a refuge thing but an invasion and if the EU do not manage it and give in to liberal hand wringing our children will reap the whirlwind...  Nothing to do with trading but hey, it's nearly Friday... 

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Cable is, hopefully, no longer a conundrum for me, it is going the same way as EURUSD only different.  I don't see GBP as being as weak as EUR, despite all the Brexit stuff.  For sure it will go down but for now at least the support line at about 13450 looks favourite.  Having said that there is a possible set up for a crushing Bear if my weekly labeling of the recent purple 1-2 turns out to be right.  This would indicate a strong downward move in 1-5 form that would crash through 13450 and head towards parity, we have not seen that since 1984.  If that happens we could be in for some Orwellian behavior too...

 

Either way it seems to be going down for now but not a fast or as strongly as EUR (good news for my EURGBP trades...) but I expect GBP will come more strongly soon.  On my hourly chart we have only just begun what I hope will be the big wave 3 but so far there has been a lot of chop holding this cross up from a bigger drop.  If we get a catalyst against GBP this could change soon.

 

I have a few good trades at the recent tops so, as with the EURUSD my strategy is hold them for the long term and sell into the relief rallies.

 

 

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Well that was fun (!) now back to the analysis to see what we can make of it all.  I still see GBPUSD in a Bearish scenario and today's wild spike actually gives me confidence in this assessment (similar on EURUSD).  I see this market in a complex wave 4 but we could be coming out of it to the downside.

 

On the Daily chart I have a Triangle formation containing the whole move since 3 Feb 2016.  There is a classic A-B-C retrace of the Bear move back up to Blue 4 and after this the complex pattern kicks in culminating in today's bounce off the Triangle [i won't try to explain how a complex retrace is labeled but if you are interested look it up on elliotwave international online].  In addition the whole Triangle has a sequence of 1-5 touches/waves (very often the 5th is the last and the bounce back off resistance at this point shows the direction of the long term trend.  Add to that neg Mom div at the Blue 4 point and other indicators turning down and we have a proposition at least.  There is a chance of a rebound off the lower Triangle line still but a stoop protected Short at the top is a decent bet.

 

On the Hourly then, I see a Wave 1-2 retrace (brown labels) off the Green 2.  It is almost a double top but you get that in complex Triangle formations all the time so the Fibonacci relationship doesn't work in these moves.  Neg Mom Div between Brown wave 3 & 5 turning points (the latter also at the complex C/y & Triangle 5).  Solid A-B-C EW count up to today's high and a strong rebound off the Triangle resistance all points to a strong Wave 3 down now.

 

If you look at EURGBP you may see a likelihood of a relief rally, which suggest either than EUR will retrace back up further and faster than GBP vs USD now OR that GBP will cane it down...  Int he former scenario DX wont help much with GBP as the EUR is the biggest part of that basket.

 

Look forward to comments and alternative views as always!

 

Here are the charts:



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