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Cable conundrum


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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?

 



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 Sets a new cable conundrum; 'If no June US rate hike and no Brexit, how high can cable go?'

 

If you consider Brexit polls being the main drag on cable over the last 6 months cable could well try for a re-test of monthly resistance at just above 15800.

Weekly chart:

 



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  • 2 weeks later...

Hi    I think that cable is as unreadable as it is untradeable in the current climate/volitility. That was a very interesting chart on vol from DailyFX a couple of posts back, much more vol than any general election even. But worse is the squeezing going on, massive spikes that just take out stops before reversing.

5 min chart from yesterday.

 



 

 

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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...

 



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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.

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Yes, fully agree, you just have to look at the chart structure and bar shapes early June (for the most part reasonable and rational) compered to now. The very high spike in volatility has created a very dangerous market for all but day traders most. With the brexit gap now so thin can only expect more of the same.

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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.

 

 

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  those charts look good with divergence widening as price runs into the resistance zone but I would be extremely wary of opening a position Friday afternoon and leaving it open over the weekend with a new poll out tomorrow, especially with the concerns raised in the 'Brexit' thread. Still, it is exciting. 

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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.

 



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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!"

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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.

 



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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.

 

 

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