What the Fibs?!! This is why my husband thinks I’m nuts LOL.
It’s poetry to me.
Tag Results: gbpusd
Wow, I’m A Trading Indicator Now
A fellow lady trader, Raghee Horner, using her @faithmight indicator LOL. A term she coined. I love it! And I’m flattered :)
“It takes a fundamental shift in the market for a currency pair to transistion from one 1,000 pip range to another.”
— Ilian Yotov, The Quarters Theory
When the GBP/USD made its transition into the 1.5000s, the market believed that 2 things were happening in the UK:
- The UK economy was recovering more robustly than previously expected.
- 3.1% YoY inflation in the country was still a worry as it still remains well above the Bank of England’s inflation target of 2%.
The market got ahead of itself thinking that robust growth and inflation would be enough to move the BoE to raise interest rates sooner than the market previously expected. Cable bulls gained momentum as evidence of a seemingly strong economy and rising inflation would surely awaken the Bank of England from its monetary policy slumber to not just move on rates but deliver interest rate hikes. POOF!
UK data last week revealed that the economy is just not that strong. The market got its confirmation from the BoE Governor himself as Mervyn King was very dovish in delivering the Bank of England’s Inflationary Report yesterday. He stoked market fears that the BoE would not only hold on monetary policy but was ready to move on more quantitative easing if necessary. The market has has become fearful that a global slowdown is underway and though the economic data has been mildly strong as of late, the UK will also show signs of economic slowing. And that will put the brakes on $GBPUSD’s advance above 1.6000.
(via fmfx)
“So, it turns out that dailyfx.com charts go back 30+ years. I pulled up a chart back to 1978 (monthly chart with 1000 periods) and I *sorta* see a trading range on GBP/USD. Check it out. Your eyes can focus in on a number of patterns.
http://www.dailyfx.com/charts/netdaniachart/”
from Dr. Duru in the comments of my recent article, Can Sterling Keep It Together? | StockTwits FX
And this is why social media is AWESOME and POWERFUL! I had wanted to see the 30-year chart of the GBPUSD too when I had wrote the article but couldn’t find one and asked for readers who did find one to post it. And one did!
This. Is. HUGE! Such a tremendous honor as this signifies that the quality of this article is truly excellent. Now to keep it up.
My article this week on StockTwits.
This is why I love tethering. All mobile devices should. I did the math in my head and can post the 10 minute chart and pull the trigger. All while riding to the airport. SMH at technology. I like the hourly chart too.
A More Meaningful Correction This Time?
After a decent correction and a break of the range earlier this week, the GPB/USD made new lows in today’s session at 1.4870 but completely reversed and made new highs 10 pips from the 1.5000 whole number.
The daily chart has a strong downtrend that recently made 2 bearish waves from 1.5815 to 1.4780. In the circle is what may be shaping up to be a FAILED 3rd bearish wave which looks to have bottomed at a higher low with today’s 1.4870 low.
While I would consider a break above 1.5000 bullish, 1.5033 is the area to watch as the 50% Fibonacci retracement level of this latest push to the downside. A break and subsequent close above this level sees the pair move back towards 1.5200 where prices topped out on at the start of this trading week.
fmfx:
Cable continues to rally since FOMC minutes, BoE minutes, and NFP. The USD is weakening in the face of poor fundamentals and increasing risk appetite. Will it last?
The 3rd time was, INDEED, the charm as GBP/USD rallied to a high today of 1.6304.
Trading Strategy for BoE Rate Decision Tonight
fmfx:
Fundamental Analysis: Interest Rate Decision
The Bank of England (BOE) decision on short term interest rate is due to be published tomorrow (Jan 7). The decision on where to set interest rates depends mostly on growth outlook and inflation. The primary objective of the central bank is to achieve price stability. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency.
A higher than expected rate is positive/bullish for the GBP, while a lower than expected rate is negative/bearish for the GBP.
Analysts predict that the rate will remain at 0.50%.
(the above analysis via Forexpros)
Though the rate is expected to remain steady, traders will be looking for sentiment regarding the BoE’s quantitative easing (QE) policy. Any signs of exiting QE will be bullish for the GBP while any signs of prolonging or even extending the QE policy will be quite GBP negative.
I fully expect BoE minutes to be dovish - kinda like what we saw from FOMC - and the market will spike on GBP weakness on its release. The difference, however, is that the markets expect the BoE to be dovish. Market actually expected a more hawkish Fed. So I do not expect GBP weakness to last. The technical outlook poises both the GBP/USD and the EUR/GBP to gain further GBP strength especially as it turns out that the Federal Reserve is not so hawkish anymore and the EU is more debt-burdened and economically fragile than previously thought.
GAME PLAN
I am looking to short the EUR/GBP on any spikes. I have limit orders set up all the way to 0.9100 where a break of this whole number opens up price to the November 30/December 1, 2009 highs at 0.9150. Expect price, however, to find resistance and pause or reverse at 0.9050.
For the GBP/USD, I have limit orders set to buy the pair on GBP weakness. Keep an eye on support levels on cable at 1.5963 and 1.5934, the lows this week. I think GBP/USD will be unable to break and sustainbly hold below these levels and we see the pair rally.
As always, trade what you see, not what I think.
fmfx:
Cable At Multi-Month Lows
The GBP/USD broke out today to new multi-month lows below the 1.5921 support at 1.5864. Price, then, bounced and retraced to as high as 1.5936 capped by the 38.2% Fibonacci level at 1.5941. Now into the New York close, cable has resumed its downward momentum with price back below the 1.5900 whole number.
We mentioned at the start of the week on Sunday 3 important things:
- that as long as 1.5920 support held expect the GBP/USD to rally back towards 1.6100. Cable made a decent attempt with today’s high at 1.6066 when price made a low yesterday above support at 1.5931.
- that it would be non-scheduled announcements that would move the markets this week. JP Morgan’s announcement stopped the GBP/USD correction rally dead in its track spurring the reversal back in the direction of the LT down trend. In addition, worries about credit quality out of Abu Dubai fueled risk aversion thus keeping the pressure on the currency pair.
- that if support at 1.5920 was broken, then retracement was over and expect a breakout to the downside. Cable broke out 54 pips before finding support at the lows with little regard for the 1.5920 support level. Looking at the above hourly charts, the GBP/USD slid 148 pips in 2 hours.
With price staying and closing below 1.5920, now previous support, cable now targets the 1.5801 ST on its way to completing the quarter to 1.5750.
A close below the 1.5900 whole number would further confirm the weakness of the GBP/USD currency pair. With fundamentals and technicals aligned right now and price remaining 75 pips (and more) below the 1.6000 large quarter point, I am off cable short suspension! But I did take advantage of the bearish developments in the GBP/USD without trading it. Rather, I traded the EUR/GBP and now manage a long position started last week, booking 215 pips and adding on dips. With this position, I can stay away from the USD until 2010.
I do still see more weakness in cable. And I find it very interesting that the USD is now benefiting from BOTH risk aversion AND positive US fundamentals. However, trade what you see, not what I think.
fmfx:
My article for StockTwits at the beginning of the last trading week of 2009. It presents a contrarian view to the current down trend in the GBP/USD. Although I am a long term GBP/USD bear, I also see several technical developments that point to a possible rally in cable that could take price to the 1.6100 level.
The shortest article I’ve done for StockTwits. With holiday trading still in full swing, I wanted to state some technical developments to keep an eye on but with thin markets anything can happen.
- Via
- fmfx
