at this point, to protect a position, if you have one open, move stop to entry level at .8475.
you can see the “polarity” principle in play where the support in the spring of last year is now acting as resistance in the spring of this year …. hmmmm.
anyhoo … I’m looking for an initial target to take some off in/around 8850.
note the 38.2 and 50% retracements, largest measured move correction (dashed red line) and he polarity principle again but this time highlighted by a darker/bolder red. why? this level held as support for MONTHS and when it finally gave away, it gave away big …
note, depending on the form of the correction (if it even stops here) I might be looking to add on a pullback into the 8550-8600 area.
the Pound held the .786 and has rallied around 700-800 pips. Now, we find ourselves rolling up into the former 2009 support zone w/ a bunch of patterns coming into play. this should act as major resistance and the start of another leg down in the Pound vs USD.
just a pattern …
August 6, 2016
since the HUGE MONTHLY 31 year .78 node the pound move roughly 700 pips (note in 5 waves) and has been consolidating for a month.
take a look at the BUY PATTERN present in the GBP a little lower … they don’t get better than this. What does that mean?
well after a 31 year .786 node of support we have a Gartley BUY occurring. all it means is it MIGHT work and it MIGHT not ..
I like the fact that it’s been working/consolidating for a bout a month .. that means the moon is at play! 🙂
wow .. what an amazing vacation in the Outer Banks this past week. W/ a clear head, I open my charts this AM ..
so, the Pound found support on a 31 year .786 retracement…it “should”. But, as we know, it doesn’t have to hold – at all. But so far it has …
now, if you’ve been following my blog you’ll find that this 30 year support in the 1.35-1.38 zone should not become resistance – polarity principle.
as for me, I’m going to look for a buy pattern (nibble) – folks – this is roughly 1000 pips away so, while it doesn’t look like much on the Monthly chart – it certainly could be a sizable rally right into the “wall of china” polarity principle.
since the HUGE MONTHLY 31 year .78 node the pound move roughly 700 pips (note in 5 waves) and has been consolidating for a month.
take a look at the BUY PATTERN present in the GBP a little lower … they don’t get better than this. What does that mean?
well after a 31 year .786 node of support we have a Gartley BUY occurring. all it means is it MIGHT work and it MIGHT not ..
I like the fact that it’s been working/consolidating for a bout a month .. that means the moon is at play! 🙂
wow .. what an amazing vacation in the Outer Banks this past week. W/ a clear head, I open my charts this AM ..
so, the Pound found support on a 31 year .786 retracement…it “should”. But, as we know, it doesn’t have to hold – at all. But so far it has …
now, if you’ve been following my blog you’ll find that this 30 year support in the 1.35-1.38 zone should not become resistance – polarity principle.
as for me, I’m going to look for a buy pattern (nibble) – folks – this is roughly 1000 pips away so, while it doesn’t look like much on the Monthly chart – it certainly could be a sizable rally right into the “wall of china” polarity principle.
wow .. what an amazing vacation in the Outer Banks this past week. W/ a clear head, I open my charts this AM ..
so, the Pound found support on a 31 year .786 retracement…it “should”. But, as we know, it doesn’t have to hold – at all. But so far it has …
now, if you’ve been following my blog you’ll find that this 30 year support in the 1.35-1.38 zone should not become resistance – polarity principle.
as for me, I’m going to look for a buy pattern (nibble) – folks – this is roughly 1000 pips away so, while it doesn’t look like much on the Monthly chart – it certainly could be a sizable rally right into the “wall of china” polarity principle.
Joe Dinappoli once told our seminar … your either going to build the boat OR sail it. Choose one …what he was trying to say is your either going to TRADE or your going to put out research. No one side is better than the other …I’m of the mindset that in order to TRADE you need to put in place a game plan or strategy. But in the end, it’s about putting the gameplan at risk by deploying money….
Tomorrow might be a historical day and, then again, it might be a whole lot of nothing. If the Scott’s do vote to leave the UK well, it’s going to move EVERYTHING. As a spot FX trader I want to be ready for that .. so tonight I INTENTIONALLY erased EVERYTHING off my Pound vs USD chart and decided to work TOP – DOWN into a POTENTIAL gameplan to manage risk and TRADE WHAT YOU SEE.
Back in the day flying we came up w/ concepts of criteria for mission accomplishment: commit criteria, drop criteria, valid shot, abort criteria, skate or bonzai criteria , etc., etc. And, these were based on the Rules of Engagement (ROE) for any particular theater. So guess what, we are going to devise our ROE based on risk management:
By the end of this post, a game plan will have unfolded … let’s begin !!!
ROE: Counting will begin approximately 2200 British Summer Time or 5PM est 09/17/2014. Due to monstrous potential for volatility w/in the FX market, a POSITION will NOT be put on until after 5:00 PM. Any position could be immediately wiped out if a monster reversal occurs. Then again, if your right the position could move in your direction amazingly well. But guess what … that’s gambling not trading. WAIT until the count is complete.
ROE: expecting 1.5700-1.5800 to be major support and given the very oversold condition of the Pound on a daily basis, will be very cautious to “just short” the Pound. If we reference the monthly chart, we will see that current move down is very small in the big picture. there will be time
ROE: if the market rallies then will look for 1.6390 but higher targets are more favorable to relieve the oversold condition. they are 1.6460 and 1.6540-1.6560.
ROE: note, some of these levels are pretty far away and if you are a scalper then just book mark these levels. There is a distinct possibility that the Pound could move 200-300 pips in a matter of minutes. Unless you are a HFT w/ exceptional light speed MOST IF NOT ALL BROKERS will not get you the fill you want … however, after the initial burst, these levels become very important and therefore a gameplan can be worked.
Great British Pound Monthly
Using RSI to see where the support and resistance levels have been … the big thing is notice that the 2007 – 2014 time frame we are seeing a grid shift in that the we busted thru support and now, have failed at the lowest level in the history of the chart. My mindset is bearish and therefore believe on a weekly/daily timeframe (key) any rally should be faded. Other than that, no specific and/or tactical ROE aspects to consider. Analysis only …
GBP vs USD WEEKLY
Again, using the weekly RSI, note that we are oversold but “no divergence” is present. Can still go lower, but notice the dotted blue line and you’ll see the polarity principle at work. if we break that dotted blue line price “should” vacuum to the 1.5756 level. Also, the red 90 degree angle is something for us to consider. but 1.5756 is in the way, right now.
Great British Pound Weekly
note on the above – we have a .382, .5, .618 retracement all coming in right in/around/on top of our 1.5775. THIS SHOULD BE SUPPORT.
ROE: as we approach this level, if during a sell-off DO NOT SHORT in/around this level as it could be major support ….
GBP vs USD DAILY
Note, if we can rally look for those RED LINES to short against. Also, note we are still deeply oversold on a daily basis.
GBP vs USD 60 minute
note the geometry from today’s move … hit the high and the red X is showing the gap from Sunday (very very rare in the spot FX world) has been closed. Note upper targets as shown by the light blue.
CLIFF NOTE: POUND to attack 1.7, make it thru and then set up for a SHORT. If it does not break thru, then waiting for a sell pattern. Am NOT going to try and count the current consolidation. If/when it makes it thru 1.7 it will be quite the cookoff!
CLIFF NOTE 2: please see the following link and you’ll see that my “triangle” thesis in the POUND was, well, wrong … it’s been over 3 months since I have looked at it. Took that long to bring a fresh perspective. I can still tell you that I am waiting for a PATTERN but I’m not tied to the triangle anymore …
the first thing I am going to do is go back a 100 years … I should go back further but 1) it’s the weekend and 2) believe this is accurate. While it’s true the Pound wasn’t necessarily floating against the dollar til 1971 I want to remind us that Spot Gold stopped on the .382 from the early 1900’s and it was fixed then also. So, here’s a long term count POTENTIAL from 1915
GBP 1915-2014
here’s a POTENTIAL look at the BIG PICTURE (note it’s not EXACT) but a quick look at some major trendline POTENTIAL
note the inverted head and shoulders pattern present and how the 2007-2009 THUMP came right back down to the trendline and STOPPED. Folks, that’s BULLISH … basic TA says to WAIT for the neckline break UP or DOWN on a H+S patterns and for price to “come back to the neckline” — that’s what happened…
So, now let’s “zoom in” to a MONTHLY look at the GBP ….
some things to notice – 1.4 is a BIG DEAL from a support perspective and the 1.70 handle has been key since 1996 as RESISTANCE and support. I think it’s inevitable that we are going to go up and attack 1.7.
let’s digest two major points:
1. so, believe a case can be made of the inverse head and shoulders and the return to the neckline as shown below. (note: these trendlines are not exact but are used to give us a sense/feel of where are.) Our light blue line is the neckline of the inverted head and shoulders and illustrating how we “returned to the neckline” and bounced. Now, let’s think about it for a moment — if you can remember back to 2009 the financial world was coming unglued. So, take a look at the candles coming into this low. THEY ARE VERY BEARISH and the NECKLINE HELD. Overall — bullish ….
2. I do not have the chart data that goes back 100 years. I have used the chart above to make a BEST GUESS ESTIMATE of the trendline coming from the all time high in 1935 up in the 5.xxx’s. What we can say is this trendline is going to come into play. If I can get my hand on a good CQG chart or something like that THEN I could get more exact but it’s something to understand. There is MAJOR resistance on the POUND higher but the fact that the data isn’t as good as I would like it “could be” a 300-500 pip range. Way to much to manage risk … but be aware.
now that we have defined the key areas we can also get a “feel” by using the long term RSI support and resistance zones
what do we see ? In the long term picture there have been times where it has bounced off BULLISH support in the 40-50 area but it has NEVER broken thru the BEARISH resistance levels defined by Constance Brown.
so, note sure I am any farther along then when I started but I do think I have put together an executable gameplan. Let me know what you think ….
so, where do we sit now? below you will find a daily chart of the GBP vs USD and, well, nothing has really changed. let’s focus on a couple things:
the target we had “hoped” for is, quite frankly, still out there and rest at 1.6330. it is conceivable for one more push into that short zone.
the analysis of a multi year triangle completing (big blue 4) is still alive.
the move from 4 (big blue) down to the 1 (green) represents 1 0f 5 in a 5th wave decline that “should” take out the 2009 lows.
most recent price action is viewed as a 2nd wave correction in a-b-c fashion. the 1.618*a = c level is at 1.6297 (never hit)
here’s the most important part – the 2 month consolidation is either is 1) corrective and an advance to our long standing target will occur OR 2) the most recent high yesterday is “it” and we start down. I don’t know which is which but I do see a more favorable foldback than the one originally presented on 11/05.
GBP vs USD Daily
the foldback can be seen here …
GBP vs USD foldback into Head and Shoulders
here is the 4 hour chart w/ a little more granularity …
GBP vs USD 4 HR chart
will be trying to get short (again) on this potentially MAJOR move … our risk will be anything “closing” on a 4 hour – daily basis above our long term target OR above the 4 (big blue one). at that point I will ERASE everything an go back to the drawing board…
as I debrief the action in the Pound vs the USD over the past couple days, I can say that, perhaps, I might have done one thing different … a couple days ago we called for a pattern complete in the US Dollar and that coincided w/ the top shown in the GBP. The GBP is not as prominent in the index as the EURO so I didn’t put that much weight into it. I had my entry order ready to pounce at the top red line (w/ a stop) and, simply, it never went up there …so far, this count has been working nicely. would really like the level shown right now on the Pound to hold to go up and attack the area labeled 4 … at that point, after watching price action, we’ll know where we are -1) at the start of a major leg down in the POUND or 2) a corrective move complete w/ one more rally up into our target area. I don’t know …
i had the wonderful pleasure to teach, for a little over a year, the Capstone CMT III course…the positive and negative reversal arena usually made both me and the candidates head explode. so, if you want to read about it and catch some understanding, Google: RSI negative and positive reversal by Connie Brown.
in this case we have a negative reversal, potential, on the POUND vs the USD on a monthly chart … negative reversal is when the PRICE does NOT make a new high relative to a former peak and the RSI DOES make a new peak. Basically, price isn’t keeping up so a change in trend might be on the way ….here’s the chart:
Long Term Negative Reversal on the POUND vs the USD (potential)
when we move to the weekly I’ve added the “bearish zones” for the RSI and “THINK” this entire range has held the bearish range as shown and is characteristic of a very large 4th wave triangle that lasted 4 years. recent price action labeled (1) and (2) are the beginnings of a 5th wave that will ultimately take out 1.350 which forecasts a 2500+ pip move in the POUND vs the USD.
bearish RSI zones on the POUND showing how this could POTENTIALLY fit into the context of a 4 year triangle
where are we now? well, if you have been following, my target zone of 1.6320 ish never got hit and it was missed by 60 pips which is just too many pips to swallow right now. so, below is the count I’m watching that could rise us to that area … I have not included the bearish count because it gets too darn confusing (imagine that in Elliott Wave) but the key here is that the “was this the high” could have done it and therefore we are in a wave 3 of something ( :)) so using stops if trying to get long is highly recommended. If we can successfully defend the 1.6020 area and get some THRUST and MOMENTUM going up then perhaps the target will be realized. If we LOSE 1.5969 then I think the top could be in place and I’m going to have to work like heck to get into a move .. sounds easy on this blog, but in the real world w/ massive moves and swings and a 24 hour market it’s simply hard to do …
where we might be …
we’ll see and let me know if you have any questions ….
