Thread: Discuss the GBP/USD with a DailyFX Analyst

Any one know what the bankruptcy laws are in Briton? With the crunch starting there now what will be the fall out of the workers who are layed off and cant make there mortgage payments. Can they claim BR and get some relief or are they on the dole from the GOVT. Any employment insurance ? I'm trying to figure out what the burden to the Pound will be if they are footing the bill for displaced workers on top of the Mortgage crises that exist there. I'm short the rail at 1.7244. Target is well below as they are just getting started in this mess and the resistance shown at this level is a 2006 level. After this a break below 170 would cause a free fall to much lower levels I feel. Yes its a Feeeeling.The dollar is well positioned with an election and concentrated efforts to be well ahead of the turmoil that will start to accelerate in the UK right now. im not sure but I dont think they have the same kind of recovery legislated aids to help the people as much as North America. This I feel will have a more neg effect as the displaced workers will feel the burdon harder with a greater rliance on there Govt witch cost more dollars. Just my Opinion.

Originally Posted by Flguy

Are you still of the opinion that the inversion B2be mentioned last week is not going to happen? He felt very strong about his forecast. If the inversion is not going to take place as B2be has forecasted, do you still see the pair going bullish through the end of the year and perhaps mid January?

Thanks for sharing your forecast and GL

I am looking for a low to occur around Friday 1:00 am New York time. And then gbpusd may rally to the ITD 1 high.

General Motors value has now fallen below it's 1929 value!! Heard this on "Fast Money" on CNBC.

Originally Posted by cmellon

It seems that the selloff will continue until 1.7 with a probable due date of Oct 10 or Oct 13. Long term bottom could be made by then.

This selloff may coincide with DJIA making 8700 long term bottom.

Hi Cmellon,

9th of October: DJIA is 8579.19 ; And GBP USD almost touched the predicted by you 1.7050. According to your plan - are you still waiting for that level to be reached and enter the market?

Do you expect some more moves (DJIA and GBP USD) down south for the foreseeable future?

As always, I appreciate your opinion/comments.

Have a nice time!
ALF

Originally Posted by 4xis2ez

I am looking for a low to occur around Friday 1:00 am New York time. And then gbpusd may rally to the ITD 1 high.

I concur Oct 10 Friday would be a temporary long term low for everything, including major FX and stock market. Another key date is Oct 22 for stock market, we may see double bottom. What I am not sure of is GBP bottom price level, though I believe it should be 1.69-1.7 price range. It's probably better to wait until Oct 10 comes in, when we see stock market rebounds massively, that'll be the time when risk appetite comes back and all major currencies will also recover.

Tom Hougaard, a user of Market Matrix is being interviewed by CNBC for his projection. You may be interested to hear him:

http://www.cnbc.com/id/15840232/?video=883327695&play=1

Originally Posted by cmellon

I concur Oct 10 Friday would be a temporary long term low for everything, including major FX and stock market. Another key date is Oct 22 for stock market, we may see double bottom. What I am not sure of is GBP bottom price level, though I believe it should be 1.69-1.7 price range. It's probably better to wait until Oct 10 comes in, when we see stock market rebounds massively, that'll be the time when risk appetite comes back and all major currencies will also recover.

Tom Hougaard, a user of Market Matrix is being interviewed by CNBC for his projection. You may be interested to hear him:

Video- CNBC.com

I was hopping for some guidance of whether the pair is going to rebound because of Delta or some other technical indicators outside whatever would happen to the market. In other words, if the pair is to rebound is not because the DJIA is rebounding anytime soon.

I am very sure that the market will not rebound anytime soon and that is because fundamentals in the housing market are out of equilibrium. The current pain in the market is 100% consequence of the deleveraging taking place in the housing market. The housing market is seeking a painful equilibrium that is about another 20% to 30% lower in property values from present depressed housing levels. Equilibrium will be reached once landlords, which comprised of about 35% to 40% of the market place, are able to stop subsidizing their tenants and commence making positive cash flow on their rental properties. As long as landlords continue to lose money on their rental properties, property values will continue to drop in value since landlords are only capable of subsidizing their tenants for so long.

There are two conditions that will raise home rental values. The two conditions are either shortage of housing or proper housing values. Since we built excessive amount of houses in the last few years, there is no housing shortage, therefore competition is widespread among landlords. The alternative is to continue to bring property values down until the point that housing starts making money for the landlord.

As long as property values continue to drop in value which will continue for a while, foreclosures will persist and the stock market will continue to dive. That is the reason of the massive deleveraging currently taking place in the housing market. The same will happen in commercial credit as well.

Therefore, if the pair is to rebound and become bullish again in the near future, it has to be independent of whatever takes place in the stock market. The stock market will not rebound anytime soon for months and perhaps years to come.

Back to my question, will the pair become bullish despite of the market?

Sorry for the gloom. Happy trading

Hi, i think it is still possible that Oct. 10 could be LTD 12 and the pound would increase in value vs the dollar based on the humongous budget deficit of the US due to its bailouts, etc. and further bank failures. It has been mentioned that hedge funds would follow the investment banks into bankrupcies. Most noteworthy is the fact that the FTSE, DAX and other bourses had positive closings only to be followed by DJIA's collapse. Goes to show that while others are willing to buy into their stock markets, Americans are not confident of their companies. I think that the Bernanke will cut another 50 bps by next week which will cause the dollar to drop against the major currencies. Paulson and the Fed are quickly running out of options.

Question is: do your ew/delta charts remain the same as the ones you previously posted?

From Delta point of view, we are due for long term bottom (LTD 12) anytime soon.

Attached is the Delta chart for GBP USD. I have also included another chart with price link in cents between major highs and lows. For example, from major high in Nov 2007 (2.11) to current low Oct 2008 (1.69), the market has moved 42 cents lower, which is a twin fibonacci number. You can see all the price relation and links there. If it drops more than 1.69, I am afraid it's going to target next fibonacci number which is 55 cents (this means GBP USD will be 1.56). However, I doubt that it will be the case as we are close to long term bottom and we have been dropping for so much and so fast. Just my 2 cents.

Back to stock market... we are due for long term bottom in Oct 10 and/or Oct 22, also according to Market Matrix and Delta. It just happens that this seems to coincide with major currencies. VIX is at all time highs, we have been in 7 days losing streak with major major correction. People's fear is at all time highs and dumping shares. Expect today when U.S. opens, it drops another 10% or so at the opening, but by the end of the day it recovers.

It's good to know that 10/10/2002 is stock market main low. 10/10/2007 is stock market main high. There are other time links in fibonacci terms which further support 10/10 as a very possible bottom. We can get substantial but temporary rebound of stock market for 20-30% from current value lasting several months, but this will be a multi year bear market lasting until 2011, so expect another leg down afterwards

[QUOTE=cmellon;196996]I concur Oct 10 Friday would be a temporary long term low for everything, including major FX and stock market. Another key date is Oct 22 for stock market, we may see double bottom. What I am not sure of is GBP bottom price level, though I believe it should be 1.69-1.7 price range. It's probably better to wait until Oct 10 comes in, when we see stock market rebounds massively, that'll be the time when risk appetite comes back and all major currencies will also recover.

Dear cmellon

Did ur trade hit the stop loss? Mine hit the stop loss at 16999 which was the low on fxcm and gbpusd is just above 17000 now.

regards
Balaji

[QUOTE=balajisi;197039]

Originally Posted by cmellon

I concur Oct 10 Friday would be a temporary long term low for everything, including major FX and stock market. Another key date is Oct 22 for stock market, we may see double bottom. What I am not sure of is GBP bottom price level, though I believe it should be 1.69-1.7 price range. It's probably better to wait until Oct 10 comes in, when we see stock market rebounds massively, that'll be the time when risk appetite comes back and all major currencies will also recover.

Dear cmellon

Did ur trade hit the stop loss? Mine hit the stop loss at 16999 which was the low on fxcm and gbpusd is just above 17000 now.

regards
Balaji

I bailed out at 1.705 today with 10 pips loss. Have re-enter again at 1.703 with very small amount and no stop loss. I still think 1.69-1.7 would be the bottom due to what I said before above.

I am also in with two long positions at 1.7010s with no SL. I will ride this thing through because i believe the market will correct soon in favor of the longs. CMellon, thanks for the posted charts.

Originally Posted by tacamonchi

I am also in with two long positions at 1.710s with no SL. I will ride this thing through because i believe the market will correct soon in favor of the longs. CMellon, thanks for the posted charts.

Hi taca,

I hope you are in for very small amount since the market is extremely unpredictable right now. Mine can last even if it drops 2000 pips.

1.69 is broken easily. So it's going to go to 1.56 for medium term, but it will bounce at 1655, which is 61.8 fib.

The stupid FXCM trading station is not working. Cannot log in. Anybody else with this problem?

There is a good buying oportunity here in gbpusd, but the FXCM trading station is not working.

Hi 4xis2ez


Congratulations on the incredible accuracy. How did you manage to achieve this?

00:54 EST; GBP USD: 1.67829 (ASK) on Friday, 10th of Oct 08.

Have a great weekend.

ALF

Originally Posted by 4xis2ez

I am looking for a low to occur around Friday 1:00 am New York time. And then gbpusd may rally to the ITD 1 high.