Cable conundrum

[donaldprice]

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.

[Mercury]

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.

[Mercury]

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.

[donaldprice]

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.

[donaldprice]

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.

[Mercury]

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).

[Mercury]

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.

 



[Mercury]

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.

[Mercury]

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

[Mercury]

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.

[Mercury]

Possible Brexit poll rally is surely over, it was just the 1-2 retrace I was worried had not yet materialised but now it has and in an A-B-C form suggesting this is now over and the major trend down with resume in a wave 3.  13400 anyone?

 



[Guest Rich88]

room for a test of 13800 then?

[Guest Rich88]

We bounced off of the tramline yesterday, but with selling pressure building and the leave vote gaining there's a high chance this will break.

[Mercury]

Following up my DX post here is my current medium term thinking on Cable:

 

Again starting with the Monthly I see a clear A-B-C to high in Nov 2007 followed by a sharp sell off, which went below the Wave B terminus (that is significant as it negated any return to the upward trend).  I believe we have been experiencing an extended complex Wave 3-4 retrace of a motive wave down since then, which terminated at Wave 4 in June/July 2014 and since that point we have been in a Wave 5 down.

 

On the weekly you will see a zoom in on the Wave 4 (July 2014) which was followed by another sharp sell off.  The EW count is a little tricky on Cable as we can get shortish wave 3s with a so-called extended Wave 5 so we could see an end to wave 3 (Pink) reasonably soon (maybe coinciding with BREXIT vote?) followed by a decent retrace before a final wave 5 down to, well who knows how low?  For my money the 1984 lows of near parity are in the frame and for Wave 3 (pink) 13500 at a minimum but if it makes the tramline then much lower.

 

On the Daily you can see the complex wave 3-4 retrace, which included a tramline break and double kiss back (very Bearish set up) followed by a kiss back on the resistance zone indicated and a sharp fall away and then a Triangle break and kiss back followed by a sharp fall away.  This is all very bearish and supports the forecast of a wave 5 of wave 3 and further terminating wave 5 after that.  The market is currently at some temporary resistance but I don't expect this to hold.  On a Fundamentals level fears over Brexit, however overblown, dominate as remain rhetoric gets more strident and desperate and polls move in favour of leave.  Britain's deficit is astonishing huge and the economy is lackluster at best.  The USD is strong, whether the Fed raises rates or not.  Other that pure speculation I can't see any case for Bulls.  An initial target of 13400 is my plan then cash and wait for a retrace to start final wave 5 (likely after the Brexit vote dust has settled and real economic issue reemerge as paramount)

 

All you have to do now is find a suitable short entry point if you aren't already in...

 



[Mercury]

The Short trading opportunities were all 9 June and prior.  Trading Short there means now at B/E or better with stops and many hundreds of points in the bag.  For now I would wait for that retrace I mentioned earlier before attempting another short but the prevailing trend is still down for me and as I am not a day trader I won't be counter trend trading this one as the volatility makes it hard to spot a good entry/exit.  I'd expect the market to head back to the 14300-350 mark initially and then let's see.

[Guest Rich88]



[Mercury]

Ever get the feeling they don't know what their doing?  Smells like sheep and goats rather than bulls and bears with a big bear lurking in the corner, just waiting...

 



[Mercury]

Cable could be heading for another move down.  Getting close to some resistance zones with Neg Mom Div.  If this pair doesn't turn soon the bearish view will be negated for me because of a Wave 4 overlap with wave 1 (brown labels).  Ideally I'd like to see price enter the congestion zone first but it may not...  Could be time for a Short.

 

 

[Guest Rich88]

Can't help but feel this is a dead cat bounce and Monday/Tuesday next week will be triple digit down days?

[Mercury]

Could be.  May even get that today, no fundamental reason for a change in sentiment but there was a significant congestion zone that provided support, just above my wave 3 (blue) low (see 4 hrly chart below).  However we now have same above providing resistance plus GBPAUD is heading south again while AUDUSD is also tending to weakness (indicates GBPUSD will go down if these trends play out).  Could be that GBPUSD is set for range bound trading as Remain/Leave slug it out but if we get another Leave poll I expect the Bears will come out in force in the run up to the election.

 



[Mercury]

Fair concerns  but the opposite (as always) is also true.  Bulls may also be nervous about leaving Longs open over the weekend and the Big Mo is with Leave so the nervousness must be more on that side just now.  My view is that a well protected Short on the turn (which I have indeed taken) is justified on a risk/reward basis with a close stop.  If the market does push down then move stop to B/E quickly.  If the market hammers down (especially if it passes my Blue 3) then I'd be happy to leave it over the weekend at BE on the basis that the signs would be for continued weakness up to the vote.

 

As Delboy says, "he who dare Rodders, he who dares!"

[Mercury]

Cable is at a moment of truth.  Will the market conform to the bearish set up and bounce away down from the resistance it is currently encountering or will it break the bearish sentiment and go on a bull run?  What would have to happen for Cable to turn bullish?  Surely Brexit Remain vote alone cannot be sufficient, that is just status quo.  It is such a pity the margin requirement is so large now as a Short here is a decent bet in normal circumstances.

 



[Mercury]

Similar to EURUSD, Cable is shaping up for a turn at Fib 88.6%.  A confirmed turn here suggests a return to bearish moves with a potential gap closure on the cards.  A break above results in a whole fresh look at this pair and indeed the USD in general most likely.