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GBPUSD retrace trade

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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.

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

getting close

Capture gu2.PNG

done

Capture gu.PNG

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

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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.

GBPUSD-Daily_170719.thumb.png.5e13bf8bbf23b3a205ec7ad6a4b3a918.pngGBPUSD-1-hour_170719.thumb.png.472f57de37426b718d7c86acd24e233c.png 

 

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The GBP retrace that never happened ... lol

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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...

GBPUSD-1-hour_240719.thumb.png.c8214718704d0345595c63aa0c2a2631.png

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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.

GBPUSD-Weekly_300719.thumb.png.beb4e1e1bc201e45d0bacf3fd0aa3b74.pngGBPUSD-Daily_300719.thumb.png.d6dcbe1adfa531e01ad6ebb1d78f4cae.pngGBPUSD-1-hour_300719.thumb.png.057b663cdb6ea9cdb947aaad43531431.png

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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.

GBPUSD-4-hours_090819.thumb.png.df7a646b95b2bdb65b3f1b4a008cc9d2.png

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    • Going back to my FTSE analysis I see things as follows: 2 scenarios present themselves, other than fresh ATHs that is: 1) the move down to the turn on Thursday was a wave 1 (blue) off a larger scale wave 2 (purple) that should retrace, maybe in a complex fashion with a lot of whip saw price action maybe not, let's see; 2) the recent rally and drop to a new low was a 1-2 (red), which indicates a much stronger leg down is immanent. The #2 scenario would only be valid if price holds below the previous high (circa 7300).  I favour the #1 scenario. There was PMD on the 4H chart at wave 1 (blue), which suggests this is a turning point.  Also the 4H chart shows a 1-5 wave down to the 1 blue, which would be motive and suggests a trend change to the bearish side. There was strong NMD at wave 2 (Purple) which is consistent with a large scale retrace move. Just as with the US large caps, after the stop and turn up there was a sharp retrace drop to the Fib 76/78% zone before the current rally.  As the FTSE was in out of hours at the end of the week this market has not rallied as hard as the US markets.  Also we may yet see fresh ATHs on US large caps while the FTSE100 only puts in a counter trend rally. If we do see fresh ATHs on US large caps and only a retrace on FTSE and probably Dax and Nikkei as well then comparing these markets will be instructive for calling that top on US large caps.  We may, alternatively, see only a retrace on US large caps too if the top of the market in already in. Conclusion: we can anticipate a bullish period on all major indices BUT should guard against a quick reversal on FTSE 100 that would set up scenario #2.  Either way this market looks to have topped out so the coming months though to the Autumn will be critical to deciding things on all indices, and likely quite a few other markets. I am Long the FTSE 100, coincident with my Dow Longs and will swing this up for now but my bearish bias for the long term will keep we watchful for a break down of this rally and I will not be pyramiding this one, far too risky until things are resolved.
    • "....more broadly we have seen currency wars but these have not really captured the imagination of the MSM yet" Actually I'd argue we have had currency wars for some years already. History shows it goes in the following order: Currency war, Trade war, War. (Regrettably).  If I recall correctly the market falls of early 2015 (about 20% down) were blamed on Yuan being devalued by Chinese manipulation. Way before Trump! "....we suddenly get a super massive set of central bank policies that drop rates to zero" Again I'd say that has been going on for some years. Arguably you could say about 35 years since the Plaza Accord. Once fiat became unaccountable (no gold standard) the politicians proceeded to spend, spend spend =debt,debt,debt. Expect MMT  (US Democrats pushing modern monetary theory) to allow them to continue in that vein. Again history says these currencies will all eventually disappear, like species, approx 95% no longer exist.  Broadly I agree with what you say. The present financial system is critically sick that's for sure. It has propped up assets with huge doses of QE and zero rate interest policy (expect more of that when the ECB meets next month). You are correct about the size of stock markets. If the global market was a horse the bond market would be three legs of it! I digress.... However, if you are faced with massive debts then here are your options: 1) Default - Argentinian/Zimbabwe style. Not likely, at least until all other options tried - as that's the end game. 2) Grow the economy at a fast enough rate to meet and exceed future repayment obligations. In a global low anaemic growth environment? Unlikely. 3) Inflate like mad. It's the only viable option. You could, reasonably say, that after 3 massive QE sessions and ZIRP and now  NIRP that deflation is winning. Arguably it's all been a waste of time / money. Where's the kitchen sink? Presumably more of the same and then some helicopter money? It seems to me that this is more in line with Japan (targeted 10yr bond rate = 0%) which someone said in the 90s was  "...the dress rehearsal. The rest of the world will be the main event". Trying to get inflation without destroying the USD global reserve status is unlikely in my opinion and you can't help but feel that some sort of Bretton Woods global RESET will eventually emerge. It's certainly what Russia, China, Syria, Iran, Turkey etc are angling for.....and their central banks have been big buyers of bullion recently. That's why I'd recommend holding gold. Not as a trading strategy (which is what I appreciate this forum is). Nice sharing these thoughts with you>
    • So it looks like my crazy set of channels on the Daily chart is still holding well.  The breakout of the last channel line, which coincides with a nice zone of lateral S/R was retested but failed as I noted in my previous post.  I got Short off an initial rejection from this zone and Resistance line with a tight stop but price never came back so nicely in on a couple of Short positions and stop protected at BE.  Price moved back through the monthly lower channel line (purple) and put in a quick daily candle failed retest and dropped away.  It is possible we could see another retest of this resistance zone before any further move but a break below the 5760 level would be indicative that the Bear has resumed and obviously a break of the previous low around the $56 mark would once again bring $50 into focus.  
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