Thread: Discuss the GBP/USD with a DailyFX Analyst

Originally Posted by davetheeagle

John, Did you mean unlikely or have I misread you.

Yes, I meant a touch and reversal is unlikely. By this, I mean we hardly see a reversal at an exact psychological or technical level. The market usually pushes a little above or below these levels to clear out stops, and account for order momentum for those that weren't privy to that level's significance, before it reverses. Of course, 2.1 may be a great area to mark a reversal, but one runs the risk of ratcheting up a considerable drawdown if you try to top pick it with a short limit at 2.1000.

What are your thoughts?

Never trade against the trend, the pound will stop at some point and reverse, i wouldn't want to be betting money on when thats going to happen.

Short positioning in the Sterling remains extreme as retail traders try to pick a top. Currently, 69% of retail traders are short GBPUSD (long to short ratio is -2.27). Moreover, since last week, retail has been aggressively selling GBPUSD (short positions are up by 39.6%). In the past, when retail was short and selling more, the GBPUSD has rallied in the following days. The SSI gives us a STRONG SIGNAL TO BUY GBPUSD.

This Rally has become emotional for traders; now that it is above 20 yr Highs.. It is hard not to get "sucked" in emotionally and place a buy position at the most "incorect" time.. Markets still fall faster than they drive.. This will return to the 20 day / 55 day low.. after the Stop running has been done and all the "lemmings" have bought into the drive. I'm going to short.. Just waiting to place my shorts until next week. People / Companies always take profits. Decision now is.. What chart to watch? Daily or Weekly..

I learned along time ago.. Unless you are millionaire or money bags.. against the trend; you will never win. The hardest part is sitting on your hands and waiting (if you missed getting in at 1.9800 or 2.0100) .

One short I am in on is US/JP.. Wondering if it is going to go down to 80.00. I'm in.. Just waiting for the other shoe to drop. Chart set up is right. US Bank is "Fikle" about more rate cuts / Hikes.


Comments about running Lemmings?

Trade with the trend and don't pick bottoms and you'll be ahead of most traders.

John,

To be honest I am not sure where this is headed. Just glad I shorted the Dow last night which shows you how desperate I was to do something. One of my rules is never trade the indices (particularly the Dow) as it can be more damaging than trading currencies. All I know is that is the run up to Christmas we are seeing the same stories we saw in 2004 and 2006 that shoppers should be heading to the US to take advantage of the cheap dollar. Even a guy in my office asked me whether he should be buying some dollars to put away just in case he went to the States. Surely a signal that we are very near the top. My twopence worth is that there is more downside than upside but we all know that I imagine.

The quid will look tempting again at .0760. Extending a t'line from Oct 26 through Oct 30th lows provides a SL level.

Originally Posted by davetheeagle

John,

To be honest I am not sure where this is headed. Just glad I shorted the Dow last night which shows you how desperate I was to do something. One of my rules is never trade the indices (particularly the Dow) as it can be more damaging than trading currencies. All I know is that is the run up to Christmas we are seeing the same stories we saw in 2004 and 2006 that shoppers should be heading to the US to take advantage of the cheap dollar. Even a guy in my office asked me whether he should be buying some dollars to put away just in case he went to the States. Surely a signal that we are very near the top. My twopence worth is that there is more downside than upside but we all know that I imagine.

I agree. The risk is clearly positioned in trying to get long against the dollar now.

I love to hear personal stories like your coworker asking about squirreling away dollars for a possible vacation. Of course I never have such anecdotes of my own since all questions come to me after they find out I'm a currency analyst. I wonder if it is possible to set up a rss linked account that aggregates the number of titles involving a currency from major news sources that are not investment, finance or economics related. It would be a good method for generating the anti-sentiment indicator that I have seen with judging tops and bottoms that have lined up with magazine front pages (Jamie has been working on something similar).

Anywho, GBPUSD has bounced nicely from a rising trendline. while it wasn't the pairs technicals alone that did it (there was a widespread dollar selling effort), the range low around 2.0750/75 likely reveals that we aren't going to get very far until the NFPs. Perhaps it's time to put in an order around 2.0740 just in case it's a really good NFP report. If it isn't, I can just as easily take it off before spot gets down there to whip me in and stop me out (as long as spot is at least 50 points away just before the release. I'm not going to be so cavalier in trying to catch a GBPUSD breakout to the upside.

Originally Posted by Black.day

The quid will look tempting again at .0760. Extending a t'line from Oct 26 through Oct 30th lows provides a SL level.

Good call almost got there overnight before a bounce.

Been looking at the charts and there appears to be an interesting parallel with 2003. I am using the weekly chart so some of my timings and figures may be out. In Feb the £ hit 1.65 and then fell 10 cents, in June it hit another high of 1.68 and then fell 13 cents, in November it hit 1.70 and then added another 20 cents through to March 2004. Now when it hit 1.70 would anyone have been calling a top of 1.90.

OK the snakes and ladders are not so dramatic this year but we have 4 highs of 1.99 in January, 2.01 in April, 2.065 in July and 2.085 now with 1 big fall of 10 cents following the July high.

So should 2.10 be the top?

John,

Just pulled out an advert from yesterday's paper. The wonderful sounding Dolf de Roos is advertising his seminars in the UK with the headline:

Invest in US Real Estate Now!
Take advantage while your buying power is still at an all-time high.

Whilst the main draw will be falling property prices I'm sure he will be highlighting the all time high exchange rates. Having said that if you can afford a holiday home in the US, not a bad time to buy.

Originally Posted by davetheeagle

Just pulled out an advert from yesterday's paper. The wonderful sounding Dolf de Roos is advertising his seminars in the UK with the headline:

Invest in US Real Estate Now!
Take advantage while your buying power is still at an all-time high.

Awesome. You should have seen the swarms of short-term real estate investors here in the states before the housing market took its lumps. We still have a number of shows dedicated to 'flipping' homes. However, I've recently noticed that their before and after sections have shown that the flippers are having a really hard time selling the properties they fixed up - even going back 12 to 16 months. Let's see if the flipping programs fade and the 'how to buy' shows start to multiple. Of course television is never so speculative, they will go for the 'how to sell' shows until two to three quarters after the market has bottomed.

what's it all about? It seems that whatever the expectation, whatever the result, whatever day it is, whatever you do sell the USD. Hmmm ... it's got me scratching my head.

Originally Posted by davetheeagle

John,

Just pulled out an advert from yesterday's paper. The wonderful sounding Dolf de Roos is advertising his seminars in the UK with the headline:

Invest in US Real Estate Now!
Take advantage while your buying power is still at an all-time high.

Whilst the main draw will be falling property prices I'm sure he will be highlighting the all time high exchange rates. Having said that if you can afford a holiday home in the US, not a bad time to buy.

Reading the WSJ on the way to work today, they mentioned that the Miami area has a 57-month supply of condos at the current sales pace. Looking for a bargain? Given that I have several personal acquaintances who are ruing their decision to put down deposits for pre-construction properties, I can tell you that there are going to be a lot of people in desperate need of cutting losses short. Doesn't look good.

Originally Posted by Black.day

what's it all about? It seems that whatever the expectation, whatever the result, whatever day it is, whatever you do sell the USD. Hmmm ... it's got me scratching my head.

I Say that the World is Punishing the US for causing the Sub Prime mess... The world is a vindictive place sometimes.

that's about as sound an excuse as any I've heard. Perhaps the straw that eventually breaks the camel's back will be when the USD is unable to rally off fair good-ish data. US NFP was pretty good and now 'durables' printed +ve too ..