GBPUSD Forecast (16 Sep 2012)

I’m back!  I’ve been away from trading for so long that I can hardly believe all the huge moves I’ve missed!  Nonetheless, trading opportunities are always around.  Thanks to the prodding of my friend Soon Chye, I’m looking at my charts again.

Might be alittle rusty from the downtime, but here it is… my view on GBPUSD.

GBPUSD 8H Chart

Even with the current USD weakness, the charts seem to imply that a short opportunity is coming soon. Here’re the reasons I see for preparing a short.

1. The move is clearly parabolic, and it is common for parabolic moves to retrace.
2. I’m counting the end of a corrective wave up.  Even though the moves are somewhat parabolic, it does look corrective with its overlapping waves
3. It is approaching a significant resistance level (30 Apr High), and a round figure (1.6300)

Reasons for holding back:

1. I think there’s going to be a pull back and then a higher high before the move retraces.  I still don’t see an divergence on the 8h and 4h at this point.
2. I can’t get a good count on the final v wave, which looks like it still has one more wave to go.

There’s still a short term opportunity for trading.  If you are able to watch the charts, I’m fairly sure that even if price does break 1.6300, you will still achieve a nice bounce (probably 30-50pips) off that level.

Good luck with your trading!

GBPUSD Forecast (4 Aug 2011)

Here’s a short update on the cable.  I’ve modified my counts a little after looking at the 1hr.  It looks like a expanded flat has just completed, and it is completing its wave v of 3.  If that’s true. it will still have a wave 4 correction, before a final wave 5.

This means we can expect still some more range bound price movements to occur before we get a more decisive direction.  I would think that range-bound strategies would work well in the near term.

Price Range to watch is still around 1.6500-1.6530.  Look for price weakness, and breaking of previous lows.

GBPUSD Forecast (30 Jul 2011)

 

Just a very quick post on what I’m looking at.  The GBPUSD seems to be close to a significant level around 1.6526 which is a convergence of

a) C = 1.27A
b) v = 1.618i
c) v = 0.618 (i-iii)
d) Support / Resistance Level

 

No trade entries have been created, but I think its a good level to watch.

GBPUSD Wavecount Invalid

My latest wavecount for GBPUSD has become invalid, and I'll need to go back to the drawing board. I've realised that I've gotten lazy and neglected to look for alternative wave counts too. Do remind me if I don't include alternate wavecounts in my next analysis.

Meanwhile, I've found a rather interesting video on trading zones. Thought you might enjoy it. :) Can't seem to embed it here... so here's the link.

USD Pairs Gains from Better than Expected Existing Home Sales Report

CNN reports that Home sales rise on biggest-ever price drop and that the Dollar rebounds, but worries linger. This shows how negative the current sentiment is on the current markets. The Cable dropped slightly on the better than expected existing home sales report, but quickly recovered as shown on the chart below.


This is in-line with yesterday's post on the cable where we expected prices to rally. But since today is a public holiday - Easter Monday - trading volume has been rather low. I expect volatility to return tomorrow when more traders are back in action.

GBPUSD Forecast (23 Mar 08)

I hope the markets are treating all of you well. During the past few weeks where I had been busy, it appears that many things were happening with the markets! The one that most captures my attention is what's happening to Bear Sterns right now... $2 a share is just crazy!

Head & Shoulders Pattern for GBPUSD
ok, back to the main topic - GBPUSD. I'm see one of my favourite technical patterns on the cable right now - A break of the neckline of a head and shoulders pattern.

Based on traditional techical analysis, this pattern has a nice price objective of 1.95, or about 300 pips away from its current price of 1.9820. But I always like to look at the bigger picture to get a sense, and I'm always using Elliott Waves in my analysis. So I pulled up my weekly chart, which I had labelled many months back.

Weekly Chart



Please pardon me for the messy chart, it has afterall been labeled several months back. Based on this weekly chart, I'd say wave 5 of (5) has been completed and a much larger correction is now underway. Since the larger degree of wave (1) to (5) started way back in Jun 2002 with a price of 1.380, I'm expecting a rather significant (and somewhat scary) correction. Even if the correction retraces to the 38.2% level, that's still a drop all the way to 1.7993.

So that's the larger picture I'm seeing. What do I think is happening in the lower degrees?

Daily Chart

Based on the Daily Chart, and assuming that my wave labeling is correct, I think there's still a downside potential all the way to 1.8555. That is quite close to the 38.2% level (1.7993) I mentioned earlier.

But why 1.8555?

Assuming that GBPUSD is now unfolding an expanded flat, my Wave A could have been the end of the expanded flat correction. But the subsequent movement did not appear implusive to me, which indicates that there could be further downside potential. So if Wave (C) is not completed, then it could be unfolding as a zigzag. Pulling two fibs for Wave (A) and Wave A, there's actually a convergence.

[Afternote: Please note that there's a slight error in the chart. Wave (C) is 261.8% of Wave (A), not 161.8%]

At 1.8555, we have
i) Wave (C) = 261.8% x Wave (A) - For the expanded flat, and
ii) Wave C = Wave A - For the Zigzag.

Possible Approach to Trading


Using a 4-hourly chart, Wave i-v of Wave 3 is currently underway. Trading volume was low due to Good Friday, so we see that price had not moved much. But it seems like there is some upside potential. One could look to go short near 1.9940 which is wave 1 ended and also the 38.2% retracement level. Target should be around 1.9700. The stop loss should be around 2.0040 since wave iv should not overlap wave i.

Alternatively, you can look to trade the longer term and wait for wave 1-5 to complete instead of trading wave i-v. It all depends on your risk appetite and always remember to do good position management. Scale some profits out when you can, and leave some to run long term.

You can also consider trading the head and shoulders pattern with a price objective around 1.9800.

Alright, that's all I have for now. Good luck with your trading!