GBPUSD retrace trade

[Mercury]

Trading is a frustrating enterprise @MYK1, as many people point out, losses are part of it.  If you have good stop placement and you get taken out then this ought to have been a loss you were willing to bear (i.e. doesn't kill your account).  It also means you can start fresh.  In the case of GBPUSD the red line is around 12430.  Below that a new set up must be sought (either a new wave 1 bottom or the beginning of a big drop (which ought to be mirrored in other pairs like EUR and AUD with a big rally in USD).  Note, in my book it is perfectly feasible for GBP to put in a new wave 1 (and/or double bottom) and then rally but I would not hold a Long below the red line; I would wait for a new set of signals.

Just for info, I did take a Long back at the breakout of the 1H channel, with a stop just below the red line, which I am still holding for a minimal loss if taken out.  I did not add any further positions as I was expecting a pull back (EWT technique), and recent history suggested it would be a strong one (it clearly is, or will break lower...).  That leaves me in a Long already so I will not think about trading another Long until I see a credible turn.

As I noted on my EURUSD thread, there is a lower low (for a lower wave B) scenario there too, which must be watched as this is the main USD mirror.  In addition, EURGBP has now put in a higher high and is approaching the long term overhead resistance trend line so ideally we need to see that turn for my lead GBP scenario to bear fruit.  I will post on my Triad thread in due course.

Net then I would not be going Long on GBPUSD until I saw a turn on price action, that ideally was backed up by other pairs (especially EURGBP, which means EUR could go lower while GBP rallies).  Any Long should have a stop just below the red line (12430) as you don't want to carry the position into white space.  It is all about minimising exposure and money management really.

[phillo]

On ‎09‎/‎07‎/‎2019 at 09:10, elle said:

getting close

done

[Mercury]

👏

So what happens next?

[MYK1]

Next Elle owe us Champagne 😁 As she is the only winner and we all losers  lol

[Mercury]

IF EURUSD is turning then could GBPUSD turn as well?  A lower low yesterday is intuitively suggestive of a break lower but often this is a Bear trap situation, and the Bears certainly gathered their strength to push lower yesterday.  However the Daily chart shows a potential ending narrowing channel, which if valid has stopped the price action.  Also price is currently in a long term support zone (check your weekly chart on this).  In the rally scenario we could see a few tests of this level before any breakout either way but if EURUSD does rally and if AUDUSD continues to show strength and if USDCAD continued to go Bearish and if bearish signals on USDJPY prove valid then I can't see GBP bucking the trend.  I am looking forward to the COT data, which has been trending steadily net negative on the Non Comms side.  I am betting we will see a very negative read from yesterday, which could spell an contrarian buy trigger.  EWT count is good for a wave 1 and there is lots of PMD on all charts.

 

 

[dmedin]

The GBP retrace that never happened ... lol

[Mercury]

So far the wave 1 (Blue) has held as a potential turn and now I have a 1-5 rally followed by a deep retrace to the Fib76/78% and today a breakout of a short term channel on that retrace.  Clearly a break through overhead resistance of the daily chart channel line and horizontal resistance level will be important to confirm this as a sustainable rally scenario.  With USD possible at a bearish inflection point (see also EURUSD, which is lagging GBP - hence my EURGBP shorts are working well).  If all of this plays out then the rally is on.  Let's see...

[Mercury]

This is the chart set for GBPUSD as related to the EURUSD ones posted separately.  There is a striking similarity between them on the Weekly Chart, despite recent GBP relative weakness.  Perhaps this is unsurprising given a period of relative GBP strength prior this.  As with EUR and USD-DX this pair is at an important Support/Resistance level.  While another leg down to the next level resistance cannot be ruled out this market appears to be at a more extreme edge that EUR.  If you add the Bollinger band on the weekly chart you will see that the previous 2 times the market spiked down through the lower band line to touch the channel line but closed on or inside the band.  The market has currently done that again, will it close back within the band again?  If it does a rally is likely to be on.  There is not PMD on the Weekly here but crucially there is on the Daily and Hourly.  This one is a more extreme trade but I have gone long off the touch and rejection of the Weekly line with close stops below.

[Mercury]

GBP has been idling for some time, not joining other pairs on respective short term moves.  With a slew of UK data coming out at 09.30 maybe this will trigger a breakout.

This market is fairy straight forward right now in that it either breaks through support into a new bearish phase (re-evaluation time for me) or rally hard out of this support zone.  I am leaning to the latter, especially if EUR also rallies out of its consolidation phase.

[Mercury]

Strong bullish move in the past few hours on GBPUSD, less so on EURUSD but it is there too, despite the Italian PM resignation, so much for the news (maybe bad news is good news for FX as well as stocks...

Anyway, regardless of the whys and wherefores, the price action looks like a retrace to the Fib 62% (in A-B-C form) after a decent rally away from support on PMD for a potential wave 1 (blue) turn.  Will need to see a break of overhead resistance and of the daily chart upper channel line to get serious but for now I am happily Long off the fib 62% turn.

[Mercury]

GBP looks to be leading the way against USD.  The daily channel resistance trend line was reached and rejected initially but now price is making a second attempt.  A breakout here will be significant I feel if it is with some strength.  Ideally would like to see EUR and possibly also JPY do something similar.

[dmedin]

Is this the 'big one'?  If so I need to put some more money in my spread bet account. 

[dmedin]

Would going long on the below be trading counter-trend?

[Mercury]

If you have the patience and don't feel the need to be "in the market" constantly @dmedin then trading the breakout is the way to go in my book.  This is why I focus on longer term swing trading, although I like to spot the trend change early and get set up earlier than the breakout to create a base from which to pyramid a breakout move.  If this is the move I have been chasing all this time then I will be in good shape.

As to whether this is a counter trend trading opportunity or not, my view is yes it is but it is a significant one, a major retrace potential.  That said there is a view out there that EUR in particular is due a big move.  I still think USD will go bearish for a while but will rally hard as a safe haven in due course.  How to decide when this might be is what the recession watch stuff is all about. Quite apart from it being an obsession, as some have suggested, it is, to me, a sensible thing to keep a weather eye on.  In fact I would say to ignore it and trust to the never ending bull is obsessive, but that's just me...

[dmedin]

Missed a wee beaut this morning:

[dmedin]

A nice big fat juicy hammer forming, my bonnie bairns?

wee bairns?

 

Edited September 3, 2019 by dmedin

[dmedin]

Is THIS now the beginnings of the big retrace for GBP?

[Mercury]

Pin bar trend reversal on a key weekly chart supporting trend line & horizontal support zone with Positive Momentum Divergence.  Clean 1-5 EWT count in the daily channel, which is now in the process of being broken to the upside.  Likely to get a pull back at some point, maybe a break and retest of the channel line or breakout zone rather than an internal channel retrace?

A confirmed break above and rally away puts the retrace firmly on with a potential target of 14000 or thereabouts.  It's all about the dollar.

 

[Mercury]

Channel breakout looks to be confirmed with a short term retrace back to the breakout zone (horizontal support) and fast rally away.  This on some UK economic data positivity but it was happening anyway.  I see the small retrace as a 1-2 and now we should see a fast and long move to a wave 3 (probably consolidation around halfway) prior to completing a wave A (first part of the overall retrace move).

If you have missed it look at EURUSD, which is lagging at present but will most likely follow GBP in due course.  Other pairs AUD, CAD are also running hard, although in these cases I would be anticipating a retrace, which could offer a but the dip opportunity.

[Mercury]

GBPUSD rally has been strong since the turn off the lower channel line and associated horizontal support zone.  A break of the upper channel line, a quick failed retest and the market bounced away in a decent rally.  One could be forgiven for jumping on board as FOMO kicks in.  However markets don't go in straight lines and while Longs inside the first channel may be fine any thing above and down to the breakout zone may be at risk from a sharp bearish retrace.  I am looking at a parallel channel and resistance zone close above plus building NMD that could send this market back down to join all the other USD pairs in retrace prior to a strong rally.  Buy the dips is my bias here but I expect a decent retrace to set up the strong wave 3 rally.

[Mercury]

Whatever is happening with respect to USD generally, and it looks like we may see a slightly lower low on EURUSD at present, the retrace bearish move I was looking for on GBPUSD seems to be in play.  Key question will be whether it turns in a wave 2 or carries on down.  Shouldn't take too long for this to resolve one way or the other and in all likelihood we would need to see USD fall and EURUSD rally hard for this pair to stop and turn.  Having been stronger for a while I feel GBP may be on the verge of a phase of being weaker than EUR, enough to get the MSM talking about parity and Brexit impacts again...

 

[dmedin]

Who all else is trembling in excited anticipation of the next big drop?  Go on my son! 🤓

[dmedin]

I got stopped out and little wonder.  On the four hour chart it looks totally different.  A big fat hammer.

 

[Mercury]

GBPUSD version of a similar V-Bottom to that on EURUSD, except that this is on a wave 2 retrace rather than a true trend ending bottom.

The wave 2 turned at the Fib 62% on a failed retest of the previous channel breakout zone and on PMD.  The pair of parallel channels is holding well so far so a breakout of the upper channel line is the next test.  After that we should see a strong move up in a wave 3 (actually already starting of course) towards a probably wave A of the large scale counter trend retrace.

 

[Mercury]

Looks like FX markets like the Tory revised deal, maybe not so much for the Euro traders, although that is all short termism.  The breakout on GBPUSD is similar to the one we saw on EURUSD recently, although it is stronger.  A break of the second (parallel) channel line will be very bullish I feel.

[Mercury]

GBPUSD was much more definitive and offered much greater reward today with a breakout from the turn at the Fib 62% on PMD.  The wave C was unusually short (or A was unusually long) but the Fib levels came to the rescue for me and I was able to trade the swift breakout move Long and early, now stop protected at BE.  My risk was rewarded when price broke through the parallel channel line and closed above it.  We may see a short retest of the breakout level but as this is a wave 3 I wouldn't count on it.

[Mercury]

The parallel channel breakout was confirmed in fine style yesterday with a close far above the breakout zone.  I had already gone Long much lower so didn't need to sweat that but the confirmation suggest to me that the Fib 62% is a likely target for a wave A of a large retrace that could test the long term resistance trend line up around 14000, which would also be the Fib 76/78%.  As I have mentioned on my EURGBP thread I have been anticipating a contrarian GBP rally against the Euro, while the MSM zeitgeist called for parity, and we are getting this rally big time now (I think 85p is a reasonable medium term target before any serious counter trend rally.  This means that GBPUSD will rally further and faster than EURUSD, which is certainly the case at present.

[phillo]

clearly, it's the "Deal or No Deal" Line

[dmedin]

It's on a wave back up my bonnie wee loons.

Red is where I have a stop and green is where I'm targeting.

😻

[dmedin]

That failure to clear a Fib + two days of receding price = close position

Edited November 4, 2019 by dmedin