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Monday, January 7, 2013

gbp/usd





More bearishness ahead (11th of February 2013)

I shorted gbp/usd pair today, because I saw a reversal pattern (123) that started forming on Friday and finished in the early European session. I entered a short below 1.5783 level and exited at 1.5705. I like exiting my day trade positions before an even number and this as in many other cases it worked quite well. Pound rally had some fundamental back up at the end of last week, but these were not very important things and therefore the rally faded and pound downtrend resumed. I think we are going to see more of it soon. Watch what happens in gbp/usd, eur/gbp, gbp/aud, gbp/cad and gbp/nzd pairs tomorrow when CPI is released. You might get some good opportunities to short the cable. 

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Rally without any visible reason (7th of February 2013)

I have already mentioned in my gbp/jpy post that pound rallied more than one hour before BOE report was released. Does that mean pound downtrend is over? It is difficult to say. However, after news pound did not change its’ direction much. It stalled and has been in the same place for about two sessions now. It is quite possible that a correction is coming. gbp/usd is very much oversold and sooner or later corrections come. It might be the best time for that. Anyway, support starts at 1.5685. If broken the most recent low of 1.5630 should act as minimum support too. Resistance is at 1.5770-1.5800 and more important at 1.5880. One could attempt small longs above 1.5725 with a target of 1.5800. 




Downtrend continues (5th of February 2013)

Selling rallies in a downtrend rule works with British pound perfectly. If pound rises just a little it is met with heavy selling. After a brutal Friday Pound bulls managed to get themselves together and rally to 1.5800 level (previous support, now resistance) in two days. However, there they met heavy resistance and pound gave back all of its’ Monday-Tuesday gains and even more than that in two sessions (8 hours). Isn’t it a good proof that we should always be trading in the direction of a major trend. If you watch other pound pairs it helps you to better identify points of entries and exits. As the pound went through 1.5725 level it was clear that the downtrend resumed and it could have been a good point for entering a short in the pair. 





Fights for support
Pound bears triumphed on Friday. It fell across the board in all currency pairs. However, and I like that saying again and again that if we have wild moves on Fridays we often have a reversal on Mondays. That is precisely what we are seeing today. Pound and Yen are the strongest currencies today. This could be attributed to profit taking before key events on Thursday: ECB and BOE interest rate announcements. Nobody expects any surprises, but that should not mean there won’t be any volatility. There will be! If BOE does not show any efforts to stop pound from falling this rally will be short term and the cable will resume its downtrend soon. I will be looking for reversal patterns at the top to sell rallies or short after BOE announcement. 



 Defensive mode in Pound (2nd of February 2013)

Pound is clearly on the defensive. It is not bad for UK economy as they can export goods at much better prices. From the point of view of trading traders can benefit from it by selling gbp/usd rallies. Be always on the lookout when the pair rises as it will go down sharp soon. UK has to change its’ monetary policy and politicians to change the way they talk to inspire to go long British pound. Anyway, trend for pound is down and I do not see any signs of reversal yet. 



Consolidation in the pair (30th of January 2013)

Pound looks neutral against US dollar. On the bearish side it has just bumped at 200 sma on 1 hour chart, which now is at an even number of 1.5800. FED rate decision can change that and prices may break this hourly resistance. As you can see from the chart there are a lot of areas of resistance ahead though. On the bullish side is the fact that gbp/usd has also broken its’ hourly downtrend line and is above it now. If 1.5800 level is taken out after the news I might go long. However, I prefer trading gbp/jpy on the release. No trades before release comes out. Too risky!




Bearish comments (28th of January 2013)

British pound continued falling today after incoming Bank of England governor made bearish comments regarding BOE financial policy. More quantitative easing is ahead and this is no good for the cable. The move was not strong and one could not get enough meat trading the breakout below Friday’s lows. gbp/usd is definitely not my favorite pair at the moment. Too many choppy movements! Anyway, support is 1.5700 level and resistance stands at 1.5750. Narrow Monday range!




Technicals of the cable (25th of January 2013)

gbp/usd pair sits on support that used to be a breakout of a range from June to August in 2012. 1.5750 was the breakout point of that range. Having broken that level then, the pair came to test it. I think we can expect something similar this time. Pound bulls will try to protect the level. Resistance stands at 1.5890-1.5910 level. That is where the pair is headed. However, if we hear more of Cameron’s ideas resounding during weekend the current support level may not hold for long. So, do not be too bullish about pound. 


David Cameron talk (24th of January 2013)

Bullish daily candles did not stop uk pound from falling against us dollar. I guess this is mostly connected to the fact that David Cameron expressed his idea of UK leaving European Union. This might be a good idea as French and German politicians with their ideas of saving Europe by taking away money from those who work and giving it to those who are not willing to work is utter nonsense. Pound collapsed through its’ support today and now is headed to 1.5750. Selling rallies in Pound is the best trading strategy for the time being. 


Support is found (22nd of January 2013)

As I predicted gbp/usd pair has found support today and rallied strongly. Look at daily or 4 or even 1 hour chart and you will see bullish candles indicating that lots of Pound shorts have been closed and longs opened. Resistance starts at 1.5895-1.5910 levels. I expect some day traders will take their profits on long positions and price will retrace somewhat. If new lows are not reached I will be looking for the best place to enter the market with my Pound long orders. More serious resistance starts in the area of 1.5950-1.6010. I will probably close some of my longs there. 





Move down maybe over (21st of January 2013)

Pound seems to have reached its important support at 1.5830. Allow it to go there again and bounce before taking any longs in gbp/usd. The range for the pair in the coming days is 1.5830-1.6000 the former being support, the latter resistance. We have some fundamentals this week that could move the pair significantly. The most important is BOE minutes on Wednesday. European ministers’ meeting today and tomorrow could be another event , but that will probably have more impact on eur/usd, not pound pairs. Buying near the above mentioned support and selling near above mentioned resistance seems to be the best strategy for a few days.




US dollar strengthens (18th of January 2013)

Despite being weak against Euro and a lot of other currencies US dollar has been pretty strong against British pound. If you read my previous posts on the topic you will see that my predictions about the pair were right. It is going down. Having finally broken 1.6000 level the pair is now headed to 1.5830 support on daily charts. There is some support at a current even number of 1.5900 and some shorts will be closed for profits, but the direction of gbp/usd is still down till the above mentioned support is reached. 




Volatility is back (17th of January 2013)

Having made a new low yesterday British pound bounced off today. The rally was not very strong, which indicates that we might see new lows sooner rather than later. However, you might also see a triangle pattern develop, which can be both bearish and bullish. I do not rule the chance of gbp/usd breaking higher, despite the fact it looks more bearish than bullish at the moment. Selling rallies near resistance 1.6070 is an option for bears and buying near 1,5980-60 is an option for Pound bulls.



New lows again (16th of January 2013)

Today I am even more bearish on gbp/usd than yesterday. The pair has broken new lows after 4 consecutive bearish days. Pound has gone beyond a very important support level of 1.6000. Last time it did this was a false break. The story can repeat itself, but as there are no signs of that for the time being I remain bearish on Pound and intend to continue selling rallies till market conditions change. 



More downside ahead (15th of January 2013)

The more I look at gbp/usd chart the more bearish I become. Why? I see lower peaks and lower lows. That is a clear indication of a downtrend. The pair sits on support area now 1.6030-1.6000. Lower prices are coming for the pair. However, having in mind the tendency of the pair to form sideways action we should look opportunities to sell rallies, not breakouts. Do not be surprised to see a lot of choppy price action around these levels. Watch what happens around European sessions. If the pair near resistance at those times one can look for opportunities to short the pair. 



Resistance is overcome (11th of January 2013)

British Pound was fighting hard to overcome greenback’s resistance at 1.6070 level and managed to do it victoriously yesterday. Yen weakness influenced the fall of US dollar too. The pair tends to form narrow ranges and you have a lot of sideways action going on quite often. Previous resistance of 1.6070 is now support. gbp/usd finds it difficult to get above 200sma and stay there. Let’s hope it will be able to do it next week. Buying near support levels and selling at resistance seems to be the best trading strategy for now. The pair is currently at hourly support of 1.6105. 


gbp/usd is rising (10th of January 2013)

Although 1.6010 level was attacked and slightly broken gbp/usd pair bounced off and is slightly rising. It tells me that the break was false and this gives the pair some bullish momentum. It formed 123 reversal pattern at the above mentioned support and rallied to the most recent resistance at 1.6070. Current support is at 1.6030. Look at the chart below to see current support and resistance levels. Since we are in a range in gbp/usd we want to buy at support and sell at resistance I believe gbp/usd has reached its’ medium term support and is good to buy. I am buying on bounces. 

News from BOE did not have strong immediate response, so traders will trade based on their previously held outlook. 


The pair has no sentiment for now (8th of January 2013)

Technical picture of gbp/usd is neutral. The pair is trying to get above 200sma on both 1 and 4 hour charts. As long as it is below them I cannot be bullish about the pair. There are some bullish aspects about it. A very important support of 1.6000-1.6010 still holds. However, there is much resistance ahead. The zone of 1.6130-1.6150 is pretty strong resistance to say nothing of 1.6200. Ok, the former might be assaulted today, the latter will probably have to wait for tomorrow. The pair has jumped off 1.6075 support and is getting ready for attacking 1.6130 level. 

I prefer to wait for tomorrow and see what BOE will deliver to us when they release interest rate decision.  

Intro to British Pound versus US dollar (7th of January 2013)


This is the first post on gbp/usd pair. Hope not last! This volatile Forex pair is in a range at the moment. It tried, in the same fashion as eur/usd to take on new highs in the first days of January, but failed. It managed to do false break, but then reversed sharply and collapsed. It is now below 200sma both on 1 and 4 hour charts. Friday saw some bounce due to lower than expected Nonfarm payrolls data. It will probably be a short term reaction and the pair will continue going down in swings as it has been doing since the end of September 2012. 

The support is at previous Friday’s low 1.6000 level. Resistance is at an even number of 1.6100-1.6105. It is difficult to define other support areas as simply looking at the chart you can see them coming almost every 30 pips. However, the most current support is the most important one and the pair having gone through that can simply go down without stopping till 1.5825 – the lowest level of the current range. Another area of interest is 1.5912. It served as a resistance area while climbing up at the end of August 2012 and then served as support while going down at the end of October 2012. 

The sentiment is bearish and I am looking for reversal patterns in rallies to short the pair till more important support levels are reached.