Thread: Discuss the GBP/USD with a DailyFX Analyst

Doesnt matter where I look I seem to find almost everyone is big time bearish Cable and I dont think its warranted yet... The down move from the two dollar area was too far and fast into the down side, the market is going to need a much deeper up side retracement to work off the extreme bearish sentiment still in the market...

Just a thought here of how Cable may interact with long term fibonacci lines and the downward slope coming off the two dollar area...

GBPUSD Monthly Chart ----->

what happed to gbp/jp roomm..any body know???
please exchange information..............

Originally Posted by udesee

what happed to gbp/jp roomm..any body know???
please exchange information..............

Check on Vincy's info mate

Originally Posted by udesee

what happed to gbp/jp roomm..any body know???
please exchange information..............

Udesee, GBP/JPY room is still there: http://forexforums.dailyfx.com/gbp-j...tml#post328684

However, when we went to delete a lot of spam out of many of the forums...for some reason it took away some of the "good" posts along with the cialis, levitra, etc. spam posts.

But it's still alive and kicking. Many posts in it over the last several days.

Originally Posted by herman sucipto

Support Resistance GBPUSD

1,6535 - 1,6607 - 1,664 - 1,6678 - 1,6711

1,6504

1,646 - 1,6419 - 1,6402 - 1,6348 - 1,6249

Attachment 35632

support resistance

Herman here's something to consider...

If GBP/USD can close above 1.66 on a 4 hour candle, then I'd be willing to go long. Potential head and shoulders pattern with the neck line at the horizontal resistance drawn.

If 1.66 is seen...then we could target 1.69ish. However, it would have to close a candle at or above 1.66 for me to get in long.

There's a good shot at it with the MACD attempting to hold above the zero line and with the daily chart's trend attempting to hold its uptrend.

Originally Posted by Sean Hyman

Herman here's something to consider...

If GBP/USD can close above 1.66 on a 4 hour candle, then I'd be willing to go long. Potential head and shoulders pattern with the neck line at the horizontal resistance drawn.

If 1.66 is seen...then we could target 1.69ish. However, it would have to close a candle at or above 1.66 for me to get in long.

There's a good shot at it with the MACD attempting to hold above the zero line and with the daily chart's trend attempting to hold its uptrend.

Hey Sean, I haven't been active in a while, but I read your post and had a quick question:

Wouldn't it be a bit safer to confirm a break of 1.6660 (38.2% resistance that has been quite an obstacle) and then go long on gbp/usd?

Let me know what you think, thanks!

Originally Posted by dr.nys

Hey Sean, I haven't been active in a while, but I read your post and had a quick question:

Wouldn't it be a bit safer to confirm a break of 1.6660 (38.2% resistance that has been quite an obstacle) and then go long on gbp/usd?

Let me know what you think, thanks!

Dr. nys...if you're referring to fibs on the downtrend on the way down...then fibs should look for a short sell at a fib level.

Can you post the fibs you are looking at? That would help. Thanks.

Since the daily trend is still upward so far ....I'd buy a break of resistance upward once a candle closed above my horizontal line.

That puts the short term and longer term trends moving upward and presents a more powerful situation.

Also, those that were short the pair would be panicking at that point due to losing so bad..and that would fuel my buy position higher.

Originally Posted by Sean Hyman

Dr. nys...if you're referring to fibs on the downtrend on the way down...then fibs should look for a short sell at a fib level.

Can you post the fibs you are looking at? That would help. Thanks.

Since the daily trend is still upward so far ....I'd buy a break of resistance upward once a candle closed above my horizontal line.

That puts the short term and longer term trends moving upward and presents a more powerful situation.

Also, those that were short the pair would be panicking at that point due to losing so bad..and that would fuel my buy position higher.

I should have put these charts up before, sorry for that. Right now I have no bias for the gbp/usd, previously it was bearish but it didnt turn to what I expected.

(I plotted the retracement from low to high instead of high to low, which is why 38.2% is up. I guess it should really be 61.8% but since its palindromic, it shouldnt matter I dont think)

Here is the H4; see how 38.2% has not been successfully broken? That is a major reason why I am shaky about going long before that level.
Attachment 35744

And the D1 for reference.
Attachment 35745

Originally Posted by dr.nys

I should have put these charts up before, sorry for that. Right now I have no bias for the gbp/usd, previously it was bearish but it didnt turn to what I expected.

(I plotted the retracement from low to high instead of high to low, which is why 38.2% is up. I guess it should really be 61.8% but since its palindromic, it shouldnt matter I dont think)

Here is the H4; see how 38.2% has not been successfully broken? That is a major reason why I am shaky about going long before that level.
Attachment 35744

And the D1 for reference.
Attachment 35745

dr. nys, In my opinion, it only matters when a retracement holds...but not so much when a fib is pushed through to the upside.

So the green fib retracement area that held was a buy signal from a fib point of view.

The resistance is crucial to push past, which in this case happens to coincide with the 38% ...but its not important to me that there's an upper fib level there. I've never seen anything in fib studies that showed me that coming back through a former fib was a reason to buy. Now if the pair pushes through the black resistance line (which is also likely a neckline for an inverse head & shoulders pattern)...then I'd be a buyer based off of the daily and hourly charts both being back in an uptrend at that point.

If the resistance line (black) isn't broken to the upside...then I'd have no incentive to get into it, long.

Just my opinion on it.

Well the week is over

It's been good for those playing the ranges - on the breakout/directional trade we haven't gone anywhere. Unless we get a move in the last couple of hours of trading, then cable is going to close the week within 50 pips of where closed last week, crazy !

I'm still bullish overall on the USD but have closed all spot trades and currently only hold option positions with expiry between 4 days and 2 weeks. (If I'd known this was how the week would end I would have just sold a 1 week ATMF straddle on cable and taken the week off !)

A couple of things bothering me on the "weaker USD" scenario.

1. Equities. They have gone up very quick (S&P within 25 points of a 50% retracement of the whole drop) and any bad news is being ignored. Nobody dare take any shorts so the momentum keeps pushing it higher - but I can't see the fundamentals supporting this much longer.

2. Oil, same as equites. On the supply and demand level there is no way nymex should be up above the $70 level. but it's not supply and demand anymore. it's pure speculative trading. $75 pbl equates to $3/gallon in the US, that is going to hit the consumer. Half year corporate earnings were good, but only on the bottom line and because of cost cuts. the revenues were way down. $3 gas is not going to help that.


A couple of years ago a strong US stock market meant a strong USD, but now we have the USD acting in the same capacity as the CHF used to, ie as a safe haven currency. therefore any risk and people buy USD, but if the world is all rosey then people invest in stocks and sell the USD. the risk aversion trade.

China just seems to have woken up to the fact that their banks massive increase in lending is mostly going into retail speculative accounts on the markets. They are now talking about restricting that but I think the genie is already out of the bottle over there. When at some point the stock markets do correct (Shanghai composite has already had one wobble) there are going to be a lot of loans defaulted on I fear, which will have a knock on effect.


The other thing to bear in mind is good old fashioned interest rates. Up until last year the FX markets would move on interest rates and expectations of future interest rate moves.

At some stage all this fiscal stimulus is going to have to be gotten back. and inflation kept in check. that means increasing interest rates again. We are a way off that yet but within the next 8-12 months somebody will move.

Anyway - enough of my ramblings and thinking out loud.

Have a good weekend all

Originally Posted by JohnG_FX

Well the week is over

It's been good for those playing the ranges - on the breakout/directional trade we haven't gone anywhere. Unless we get a move in the last couple of hours of trading, then cable is going to close the week within 50 pips of where closed last week, crazy !

I'm still bullish overall on the USD but have closed all spot trades and currently only hold option positions with expiry between 4 days and 2 weeks. (If I'd known this was how the week would end I would have just sold a 1 week ATMF straddle on cable and taken the week off !)

A couple of things bothering me on the "weaker USD" scenario.

1. Equities. They have gone up very quick (S&P within 25 points of a 50% retracement of the whole drop) and any bad news is being ignored. Nobody dare take any shorts so the momentum keeps pushing it higher - but I can't see the fundamentals supporting this much longer.

2. Oil, same as equites. On the supply and demand level there is no way nymex should be up above the $70 level. but it's not supply and demand anymore. it's pure speculative trading. $75 bbl equates to $3/gallon in the US. that is going to hit the consumer. Half year corporate earnings were good, but only on the bottom line and becuase of cost cuts. the revenued were way down. $3 gas is not going to help that.


A couple of years ago a strong US stock market meant a strong USD, but now we have the USD acting in the same capacity as the CHF used to, ie as a safe haven currency. therefore any risk and people buy USD, but if the world is all rosey then people invest in stocks and sell the USD. the risk aversion trade.

China just seems to have woken up to the fact that their banks massive increase in lending is mostly going into retail speculative accounts on the markets. They are now talking about restricting that but I think the genie is already out of the bottle over there. When at some point the stock markets do correct (Shanghai composite has already had one wobble) there are going to be a lot of loans defaulted on I fear, which will have a knock on effect.


The other thing to bear in mind is good old fashioned interest rates. Up until last year the FX markets would move on interest rates and expectations of future interest rate moves.

At some stage all this fiscal stimulus is going to have to be gotten back. and inflation kept in check. that means increasing interest rates again. We are a way off that yet but within the next 8-12 months somebody will move.

Anyway - enough of my ramblings and thinking out loud.

Have a good weekend all

JohnG_FX, That's because more U.S. companies keep exapanding internationally and a lot of their growth now comes from those quickly growing markets. They earn money locally in the local currency and then convert back to their dollar balance sheets and win both ways.

That's why the USD and U.S. stocks tend to head in opposing directions these days (one of the reasons, anyway).

On oil, the media keeps saying that its not trading off of fundamentals...but really it is.

Here's why. If you follow the progression of the year over year GDP numbers...the negative GDPs have grown much less negative and so they are improving once again and digging themselves out of a contraction.

Then the ones that are positive are growing more so. In fact, Japan was very negative and it just went to very positive.

As economies recover or expand, it requires an expansion of the use of energy resources like oil in order to recover or expand.

Since these GDP numbers continue to improve "across the board" , then oil really is trading off of its fundamentals.

And China and India's improvements aren't even on the chart below. Their recoveries matter even more because they are the "new" demand on oil that didn't used to exist as much 5 years ago as it does today.

Thank you for your commentary. I appreciate you taking the time to do that. That's awesome! Looking forward to even more posts from you.

Thanks for the comments Sean, appreciated.

Ok - been having a look at the charts this morning trying to get a handle on where we are from a technical perspective, and guess what ? nothing is clear. we could go up or down from here.

It's going to be dependant on the other markets I think- whether or not it's still the risk trade, or if Bernakes' comments will lead people to believe that the US is going to start tightening.

On the technical side this is what I'm looking at.

Delta ITD 8 could already be in along with MTD 4 on the 17th, however that doesn't "feel" right as the ITD7 came in early, I would expect ITD8 to be on time or later, so in the first part of this week, therefore I'm leaning towards another pop down below 1.6270 to complete ITD 8.

What happens after that I'm not sure.

From an EW perspective it looks as though we could have completed the ABC wave IV correction. on the other hand we could get a 5th wave extension that pushes it up to the .50 fib level around 1.7330.

I'm not convinced either way- until then I'll be trading on the shorter time frames (15min, 1hr & 4hr) grabbing 40-80 pips when the opportunity presents itself using the oscillators for entry.

Keeping a very close eye on equities, gold and oil as always.

The fact that EURGBP is pushing higher, USD sold off again into the close yesterday but cable didn't move up means a directional trend change in cable might be in the offing (we've been in a channel since the 3rd June)

It could be up or it could be down. I'm not going to try and call it from here.


Anyway - it's a nice sunny morning here in Sus--- UK. BBQ and chilled wine are called for today I think.

Kind regards to all

Hi John. Could you kindly help explain how i can use the oscillators for entry on short trades. I know its a basic question but i cant seem to get this straight. I use the MACD on the hour count but no matter how much time i spend looking at it and trying to see when the crossover happens it just either jumps without me noticing it or goes quite close and then returns. Is there a way i can identify when to enter and when to exit on deals. A graph i could use that is basic yet helpful?


Thanks

Hello John,

I am also leaning towards a drop below 1.627 to complete ITD 8. Overall I am also bullish USD in the near term.

Just want to add a couple of thought:
Robert Prechter has called for USD bottom recently in his latest Elliot Wave Theorist newsletter. He has also made an appearance at Bloomberg and CNBC to explain his thought. This is the CNBC video link:
Time To Switch to Cash: Elliott Wave's Robert Prechter - Investor Agenda with Maria Bartiromo - CNBC.com

In the Elliot Wave forum, Justy has posted a possible 60 minute bullish EW count for USD Index. I reattach his chart here. The short covering late in the day last Friday happened when USD Index touched the 78.6% fib retracement, and that may complete the wave 2. It's yet to be seen whether dollar selloff could continue next week or not, or whether we reached a pretty significant USD bottom last Friday.

Looking at cable's weekly chart, it does look like cable is may be topping off. Cable tries to break the kumo cloud resistance, but so far failed at the top of the cloud at 1.7 making a shooting star, followed by bearish candle and a doji.
On weekly chart, we also have a bearish divergence at the 1.7 high.

Although I may have a USD bullish bias in the intermediate, medium, and even long term, what I am not really sure though is your call for cable to ultimately drop lower than 1.35 after the top is reached (whether the top is at 1.7 or higher like you pointed). Although I understand that most Ellioticians believe this rally from 1.35 is just a wave 4, I could not see a fundamental justification for another severe meltdown in risk currencies. As you mentioned, USD has become a safe haven currency like CHF, being bought when there's a risk aversion, and being sold when there's a risk appetite. At the moment, I could not foresee another fundamental disaster which brings a collapse to risky assets like equity and high beta currencies.

Although equity market may indeed go too far ahead of the fundamental realities lately, another severe drop to test the low or to go lower IMO is unlikely in the medium term, unless we do get some unforseeable problem in the economy. Recent fundamental data coming out of US and Europe have been quite supportive, with US housing stabilizing and Europe looking to get out of recession. Although developed countries are probably still far from growth, the stabilization sign is there.

If the correlation between equity and USD is still the same (equity up, USD sold off), then I would not expect a major USD rally since I do not anticipate a major collapse in equity say within a year. Before I consider a significant USD rally, USD has to stop acting like a safe haven currency, and the correlation between equity and USD needs to start to decouple.

Originally Posted by gordy

Hi John. Could you kindly help explain how i can use the oscillators for entry on short trades. I know its a basic question but i cant seem to get this straight. I use the MACD on the hour count but no matter how much time i spend looking at it and trying to see when the crossover happens it just either jumps without me noticing it or goes quite close and then returns. Is there a way i can identify when to enter and when to exit on deals. A graph i could use that is basic yet helpful?


Thanks

Don't mean to Butt In!!! LOL!!!

These are my oscillators sma's etc that I use to gain Great PIPS in the short term daily trades. I have a chart that I will (Hopefully) attach? But first let me try and explain what I do and what I use for these daily trades with a Very High Accuracy Rate. On my main chart, I insert the 5/13/62 sma's. And below my main chart, I use these Trends and Oscillators, and I always put them in order from top down!!!

RVI (Relative Vigor Index) This one is Very Very Important!!! Explain Later!!!
Stoch (5,3,3)
RSI 7
OsMA (Moving Average of Oscillator 12/26/9)
MACD (12/26/9)

Now, the most important of all these insert windows, and I call this my "HOLLY GRAIL" of Daily Short Term Trades!!!

"RVI" (Relative Vigor Index)

1 Hr to 4 Hr time frame for Very Very Profitable Trades of 10 to 80 PIPS through out the Day in the Busy Times!!!!!!!!!!!!!!!!!!!!!!!!!!!!

On this Chart, sorry for using the USD/JPY for this explanation in this forum, but you will deffinately get the scope of this Method for any Currency.

On my chart, I have put in the red vertical lines showing the cross over of the RVI and where it leads to PIPS, many PIPS if practiced well!!!

My favorite one is the first vertical line that scared me, but proved a very good poit of this cross over. It crossed down, but pair still went up for 3 more periods before making me a very profitable trade. And the next 4 vertical lines will show one small profit and 3 nice profitable trades. I have used this for shorting and long trades. In this chart, I show my short term long trades that proved well!!! Hope I'm Not Blabbering Too Much, but wat you to see where the Cross overs are the important, and using the 30 min chart, you have plenty of room (30 Minutes) for a profitable trade before the real move takes place!!!

Hope this explanation has been clear and insitefull for you to understand???

Best to you gordy, and hope this helps you on the short term trades as well as it has for me!!!

Ps-The other inserts are for verification of the RVI only. RVI is the "HOLLY GRAIL" of Trades for ME!!!!!!!!

Let Me Know if YOU LIKE???