GBPUSD Discussion Only

[FXGenius]

Hi,

I invite those who exclusively trade GBPUSD or have good technical/fundamental knowledge of the pair to share their analysis and knowledge in this thread.

GBPUSD having formed double top (one of 8/8 and the other on 31/8 & 4/9) finally took a nose dive from 9080 to 8630. I had both these exact points on my chart as R/S but unfortunately captured only a small portion of the move, due to server shifting.

What now?

I think, at this point a good correction/retracement is due but with so momentous move and without any reveral apparent as yet, it is very likely that GBPUSD will at least achieve 8550, which is 61.8% (61.8) retracement of recent up move (8180 to 9150).

If 61.8% is convincingly broken, the next target would be 76.4% retracement at 8415, beyond that 8300. I can not imagine any further at this moment.

[MickMason]

Originally Posted by FXGenius

Hi,

I invite those who exclusively trade GBPUSD or have good technical/fundamental knowledge of the pair to share their analysis and knowledge in this thread.

GBPUSD having formed double top (one of 8/8 and the other on 31/8 & 4/9) finally took a nose dive from 9080 to 8630. I had both these exact points on my chart as R/S but unfortunately captured only a small portion of the move, due to serving shifting.

What now?

I think, at this point a good correction/retracement is due but with so momentous move and without any reveral apparent as yet, it is very likely that GBPUSD will at least achieve 8550, which is 61.8% (61.8) retracement of recent up move (8180 to 9150).

If 61.8% is convincingly broken, the next target would be 76.4% retracement at 8415, beyond that 8300. I can not imagine any further at this moment.

I think at the very least we'll see a decent retracement of the last 4 cent move. UK data next week is expected positive towards another rate hike, and that together with data from the US indicating controlled inflation (ie Fed hold rates) should see sterling supported around 1.8575/50

Then there's positioning in advance of the G7 bearing in mind what happened to the dollar back in April......

I'm bullish for Cable but at this stage I have nothing of a technical nature to back it up apart from Fib levels, I'm scaling into a long.

Cheers


Mick

[FXGenius]

Mick thanks for the fundametal input and the factors you mentioned are really promising for GBP. Now, how likely it is that BoE will increase the rate once more and Fed may hold the rate this time and offcouse outcome of G7 meeting.

[SoundFX]

Technically on the higher time frames, she looks poised for a giant drop, but in the very immediate future, I, too, am positioning for a retracement. However, on a daily and weekly level, things are looking a bit bleaker to me technically. I'll be very cautious with any long positioning.

-SFX

[MickMason]

Originally Posted by FXGenius

Mick thanks for the fundametal input and the factors you mentioned are really promising for GBP. Now, how likely it is that BoE will increase the rate once more and Fed may hold the rate this time and offcouse outcome of G7 meeting.

A BoE hike by year end is more is less a done deal if CPI comes in stronger than expected next week, it's just a matter of when, the recent move up for the dollar has been short dollar covering. Couple that with a slowing US economy and declining CPI and retail sales and support for the dollar starts to wane, interest rate futures are pricing in just a 12% chance of the Fed going again in September (although that changes by the minute!). So compare the potential Eurozone and UK interest rate direction to the US interest rate direction and the yield differential starts to narrow.

The G7 is a big event risk as we saw on Thursday when Reuters misquoted someone saying Yen weakness would definitely be discussed, dollar/yen dropped a cent in a few minutes. Not saying we'll see a repeat of last April but the risk is there and as we all know it's 'buy the rumour, sell the fact'.

The market has been totally focused on interest rates and yield differential for quite a while now, that's what has been supporting the dollar. Take that away and what's left to focus on, the twin deficits?

This is of course all speculation and based on fundamentals, entries and targets need to be confirmed by technicals, but right now I can't see any fundamental or technical reason for wanting to buy the dollar aggressively but quite a few reasons brewing to want to sell it.

My 2 cents......but I'd be interested to read an opposing argument.

As Boris Schlossberg says...
"technical setups, elegant back tests, beautiful equity curves are all very nice and pretty but totally useless in real life. If you don’t understand the fundamentals behind your technical setup you will never succeed in the long run. That is why the game is so hard. Don't believe me? Ask the geniuses at LTCM."




Mick

[FXGenius]

Originally Posted by SoundFX

Technically on the higher time frames, she looks poised for a giant drop, but in the very immediate future, I, too, am positioning for a retracement. However, on a daily and weekly level, things are looking a bit bleaker to me technically. I'll be very cautious with any long positioning.

-SFX

SFX, you are absolutely right and thats exactly what my view is. I guess UK data (PPI & Trade Balance) on Monday may support the retracement upto 8770/80 for a further drop to 61.8% at 8550 supported by cable inflation data on Tuesday .... just my guess.

On Tuesday, we then have UK trade balance figure announcement and then Fed's Yellen will speak on US Economic Outlook. This Fed stuff must be taken very seriously, consecutively for several times in the past the such Fed stuff had created thunder storms in dollar weakness.

[MickMason]

Looks like we all agree then, support around 1.8550!

[FXGenius]

Originally Posted by MickMason

A BoE hike by year end is more is less a done deal if CPI comes in stronger than expected next week, it's just a matter of when, the recent move up for the dollar has been short dollar covering. Couple that with a slowing US economy and declining CPI and retail sales and support for the dollar starts to wane, interest rate futures are pricing in just a 12% chance of the Fed going again in September (although that changes by the minute!). So compare the potential Eurozone and UK interest rate direction to the US interest rate direction and the yield differential starts to narrow.

The G7 is a big event risk as we saw on Thursday when Reuters misquoted someone saying Yen weakness would definitely be discussed, dollar/yen dropped a cent in a few minutes. Not saying we'll see a repeat of last April but the risk is there and as we all know it's 'buy the rumour, sell the fact'.

The market has been totally focused on interest rates and yield differential for quite a while now, that's what has been supporting the dollar. Take that away and what's left to focus on, the twin deficits?

This is of course all speculation and based on fundamentals, entries and targets need to be confirmed by technicals, but right now I can't see any fundamental or technical reason for wanting to buy the dollar aggressively but quite a few reasons brewing to want to sell it.

My 2 cents......but I'd be interested to read an opposing argument.

As Boris Schlossberg says...
"technical setups, elegant back tests, beautiful equity curves are all very nice and pretty but totally useless in real life. If you don’t understand the fundamentals behind your technical setup you will never succeed in the long run. That is why the game is so hard. Don't believe me? Ask the geniuses at LTCM."

Mick

Hey Mick, great fundamental analysis! all your points need serious attention and must be kept in mind.