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Cable conundrum

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These little price gaps usually do close and when they don't it almost always signifies a major event, like a major market turn or a halfway point in a major rally (continuation gap).  My assessment is that neither of these events is on the cards at present.

 

I am still of the opinion that GBPUSD is in a complex wave 4 retrace (very hard to trade with a lot of whipsaw action and no clear direction).  However I believe we may be coming to the end stage of this.  Looking at the 4 hours chart (to compress the hourly and fit onto one page), you can see my labeling of the complex wave.  C/y is the end point but there may be one more leg up yet, hard to tell.  If you look at the Daily chart there is a strong down-sloping tramline (red) that may provide us with the turning point and a fresh high in this complex wave to complete the Wave 4.

 

There is strong Neg Mom Div on Daily, 4hour and hourly charts.  A sustained break below 14365 suggest wave 4 complete and we are in a drop move Wave 5.  A break above recent highs suggest another leg up to the Tram line before the wave 5 commences.  One to watch.

 



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Hy Mercury, always interesting to see your analysis, i believe GBP USD has now reached a major peak of which is formed a double top formation, momentum does seem to be diverging, despite the rocket momentum caused by the poor data from the US this afternoon. If we break this strong trend line then we could without doubt look at the next fibonacci levels for guided future support. 



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Thanks , I just wish I were right more often, at least in terms of timing and that said I think this is another one where I have suffered from prematurity.  Initially I was targeting the junction of the up and down sloping trams on my Daily chart, which also tied to an area of lateral resistance and then I started seeing earlier turns and was afraid of missing it.  This is classic bad psychology in my experience and just shows that knowing about that doesn't stop us falling for it...  That's where we need others to provide contrary views to give us pause for thought!

 

Anyway back to GBPUSD, I am now firmly back to my original assessment, which is for a second kiss on the up-sloping (green) tram near the junction of the down-sloping tram and that resistance line.  This comes with good neg mom div and a solid complex wave count to C/y (the final turning point).  I see where you are coming from with the double top but the I actually think that is a coincidence (or at least what the previous top provides is more weight to the resistance line).  The issue with the double top idea for me is the existence of a top in between with a higher momentum peak, you really want nothing in between or a much smaller peak with smaller momentum for a true double top in my view.

 

I don't expect an exact hit in the junction, it provides a triangle of resistance and the market can turn inside this but I do think one final leg up is likely to complete a 1-5 of a final wave up.  Having said that markets often falter before giving this so I have a dual strategy here with a stop in near the resistance line and another below the previous low on the hourly chart.  Both for Shorts as the set up I have just described on the Daily has a very strong likelihood of a trend reversal.

 

Charts:

 



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Strong push down 1/2 hour before ONS data release (GB GDP). We have seen this before.

Poor data then a profit taking rise in GBP?

Another ONS leak?

 

QoQ

Previous 0.6%

Expected 0.4%

Actual  0.2%???

 

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Leaks happen of course but if there was a market wide one we would know about it through the press and that usually signifies an intentional "softening of the ground" leak on policy rather than a data leak.  I suspect this is just normal market speculation.

 

BTW, for the avoidance of doubt, when I mentioned the previous low for my stop in order I meant around 14500 (perhaps previous congestion zone would have been a better phrase).

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What about leaks to 'selected friends'? I think there has been an investigation (started in August) but not reported yet.

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Can be, since there has been a market there has been attempts to illegally get an edge but can that move the market on its own?  Not sure and anyway what can we do about it?  Once the dust settles it's time to get back to the charts and figure out where we might be and what it all might mean, can we spot a trade?

 

On GBPUSD I see no change to my overall position.  I am still seeking the top of this move as a completion of that complex retrace wave.  This is in an A-B-C form and we are in the final Wave C (if I am right!).  In fact I think we are in the final 5 up to the resistance area around the 14650 area.  A turn here is likely in my view and then we will see.  A strong push through this level may throw us into seeking another scenario.

 

There is strong Neg Mom Div on the Hourly chart and a strong area of resistance on the Daily (see previous post on junction of several resistance aspects).  On the 15min the small w3 is in and now a final push up to or near the resistance level (it could fall short) is indicated and then we will see if it turns or not.  I think a Short in this area is a high likelihood trade.

 

Anyone got an alternative scenario?

 

  

 

 

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BTW, I should have mentioned int the original post that the alternative scenario is that the top was on 26 Apr and we are in a 1-2 retrace.  Such a scenario would come into play with a break of the lower tramline.  A sustained break (candle close) below the tram would be a decent Shot opportunity with stops to allow for a possible kiss back.

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We are arriving at the moment of truth for this market as it approached another kiss back on the up-sloping tramline (green) on the daily chart, a point with multiple resistance.  The actual tramline is at about 14680 but Cable is spiky and could turn plus or minus 20/30 points.  One to watch closely for a twitch today.  I have a solid EW count up and am expecting 1 more small leg up to the resistance level, which could be just a spike up or could be stronger.  A solid move down past recent lows would be a turn indicator for me.  A break of the hourly tramline strong indicator of same.

 



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Close below yesterdays highs is a supportive indicator that the turn has indeed happened.  Now all we need is a break of the lower tramline to confirm the move.

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So far were staying in channel, but with this monster of a rally showing signs of fatigue and UK manufacturing pmi coming out tomorrow we could see a pullback

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Cable certainly went a little longer than I had hoped but then again it is a spiky market and often spikes through a resistance area before returning within it and that is exactly what we have here.  Just look at that spike and return on the Daily chart!  Is it a complex wave (green labels) or a simple A-B-C (red labels)?  Who cares?  That is all academic now and if price closes down today then we have a high likelihood that W4 is done and W5 down is on.  Looking at the hourly my lower tramline had been breached and now the question is whether we will get a kiss back of a sharp fall away.  A EW 1-2 retrace is normal near the beginning of a motive wave (in this case final wave 5 in all likelihood) so if you are not short already look out for that.  You need decent stop distance to allow for the spiky nature of this market though. 

 



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Been planning this trade for a while and finally this morning after the poor manufacturing data took the plunge. I was questioning how valid the divergence of RSI and MACD was, also was slightly skeptical when IG live this morning was stating this could reach 15000, but everyones opinion is different i guess. What also allerted me was how it was hugging to its life on the tramline, almost comical how the bulls where holding on  to it, lol. Currently 38% fib level approaching if we break and head towards 50% no doubt exercise some caution, as you say very volatile currency pair.

GBP USD.png

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Spiky rather than volatile , which just means it has a habit of overshooting support/resistance levels and then coming back into line.  Results in needing wider stop levels than, say EURUSD, which is a bigger market place.  I think the turn is confirmed for me by the breaks of the 26 Apr high.  It could, I suppose, be a retrace before another push up if this is a motive and the market bottomed at 29 Feb BUT there is Neg Mom Div and over bought indicators on the Daily and hourly and A-B-C (Daily) seems like a better fit.  There is a lot of resistance to get through to make higher highs now and we had a very strong rebound away from the daily tram and associated resistance in that area earlier this morning.  However watch out for a sharp retrace in EW1-2 off resistance between 14480-500.  If in an A-B-C this will offer another good short opportunity when completed.

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Quite right Mercury, Spiky not volatile lol, hear the word so much these days got slightly confused. Its always difficult i find to forecast present trends beyond daily time frames, possibly experience but as you pointed out when looking at divergence on those longer time frames, you can judge key areas of support and resistance to watch for and no doubt this is why always best to have those alarms on the edges of those tramlines, but for now watcing that 50% fib level/ 14480-500 level is key and as long as overall mometum does not change, looking to short would be the idea and therefore join the W3 trainride for a while.

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Futher declines today if we see disappointed pmi

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Similar to your FTSE chart  no?  Here I think this is also in a natural EW1-2 retrace, also currently price is huging my lower tramline but I'd expect a pop further up before a resumption of the downward move.

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Cable looks to have entered that natural retrace I was flagging.  Nice potential for another kiss back on the tramline?  This coincides with the Fib 38% and timing is currently tracking to roughly around NFP time.  I'd prefer if it were coinciding with the 50% Fib and there is congestion around the 50/62% Fibs so that is a good bet if price punches through the tram on NFP.  Naturally a turn back down below yesterdays lows is a bearish signal.

 

[PS: Similar picture on EURUSD but this cross seems weaker than GBP right now and the EURGBP chart suggest ongoing EUR weakness vs GBP once this retrace is over].

 

[PPS: GBP has been tracking FTSE of late, really I think it is about USD strength on Stock market weakness, could a resumption in USD strength after NFP equate to another strong drop in stocks?]

 



 

 

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Just goes to show, that all though news is always good to incoorparate into your strategy, technical analysis always dominate. Poor US non-farm pay rolls, yet came up for a kiss 38% retracement and came back down again. Currently trading at the 50% fib level, would need to see it break both 50 and 61% to see a continuation of this trend.

gbp usd 1h.pngGBP USD.png

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All true.  I was expecting a bit more of a retrace but a near miss on my tramline is good enough and the market does seem to be  powering down now.  All in line with my analysis so I'm satisfied with that.  Just need to see EUR follow suit and I'll be a happy camper.

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There doesn't seem to be much support below current price and yet I am still worried we have not had a decent retrace yet.  The market could certainly blast down from here but equally could retrace back to the Fib 38% and tram line level so be on your guard against that whilst also looking for Short entries is my approach here.

 

I see similar on EURUSD, in fact stronger case for a retrace plus I'd expect further retracing on USDCAD and USDJPY also.

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I was thinking that friday night therefore i have hedged the position and re-evaluate monday morning. However, and will be interesting what you think, but looking from the daily and weekley charts, you notice that the momentum is changing, partially no doubt due to is entering the final 5th wave and secondary influence to this is weakening in the US economy. If you look of the daily and 4h chart i believe that we have now started the final 5th wave of which then we could starting heading towards the up side. Let me know what your opinion is of course.

GBP USD.pnggbp usd 1h.png

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GBP USD. I might be seeing a possible retrace back to possibly on or near 146 area. If i am correct we presently commenced W5 but finished W1 of W5 and now we could see a retrace of W2 to the 50 or possibly 61% level. Momentum still to the downside on daily but weekly seems to be shifting to the upside, no doubt once the whole of W5 has finished.

gbp usd 1h.pngGBP USD.png

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I see same, difficult to say how far it will retrace just yet, need to let the A-B-C evolve before assessing likely turning points.  Strong Resistance at 14500 though so that must be the first port of call but as I say it depends how this move evolves.  Patience on this one I think, may take a few days.  Also keep EURUSD and DX in mind.  USDJPY is running ahead but USDCAD is also on a retrace (maybe).

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Tramline break and Kiss back is still on the cards with a retrace underway that should come into the resistance zone before turning.  the wave action is a bit erratic and hard to fit into a coherent pattern but focusing on the resistance zone should yield a likely Short entry in due course.  EURUSD is a bit cleaner and shows similar pattern and this is all backed up by USDJPY and DX retraces.

 



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I have an old trend line taken from further back on my 1 hr cable chart. One to watch as pressure seems to be building.

 



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You can see the same line on the Daily chart but for my money it is a lower line of a triangle associated with the Wave 3-4 retrace, a complex wave pattern that has run its course.  A break of this lower line would certainly add weight to the bearish view.

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I'm lovin this GBP charge s it does two things for me:

 

  1. First it is matching my analytical path prediction for a A-B-C (watch for  tramline kiss and/or suitable resistance zone)
  2. Illustrates how ill fated trying to predict results of data releases can be - BoE does nothing and even warns on Brexit and GBP jumps?  I suspect it is more to do with the USD in fact

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Just got back to my desk and find my charts have been turned upside down.  may well be right, that was yet another US jobs data miss as well as well as other dodgy data. Has sent the DX back to where it started the day.

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For now but if the stock markets and commodities start to rout then USD would come back and that is my bet.  Retrace A-B-C on GBP and EUR especially would be an indicator of that.

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