BBmac's Gbpusd thread

[bbmac]

Whilst there are a few Gbpusd threads currently, @ the risk of overkill (I didn't want to intrude on those that are dedicated to the thread starter's style of trading) I thought I would start this one for the analysis of gbpusd. Please feel free to offer own analysis/comments. I will be concentrating on trying to identify the main areas that may act as potential support/resistaance/sbr/rbs in the future and in doing so will mainly concentrate on the 1hr chart with a view to the higher t/f's particularly where 'zones' co-exist on more than one t/f making them a potentially stronger zone.

I look at 3 factors that are historically proven as potential future support/resistance and these are;

a. Previous near-term imbalances of demand/supply [=previous swing lo=previous support=potential support/sbr] b-or- supply/demand [=previous swing hi=previous resistance=potential resistance/rbs] zones.

b. Unbreeched fibs

c. Trend lines.

...and will be looking for the most confluence between these factors and where zones co-exist on t/f's above the 1hr t/f. I will be looking for high probability set-ups on the lower t/f's with individual price action triggers at such zones.

 

[bbmac]

Month end analysis

Yesterday's post U.s GDP # rise in gbpusd resulted in a Daily and Weekly Bullish thrust candle close and a bullish Monthly hammer candle close. The uptrend extends from the 1hr to Weekly chart and price closed just off it's high on Friday, the last day of the Month.

Seasonal consensus is that August's low mid-summer liquidity can make for a difficult market, not something that bothers me on a 1min trigger.

Moving through the Monthly through to 1hr chart the analysis below outlines the previous near-term imbalances of demand/supply [=previous swing lo=previous support=potential support/sbr] / supply/demand [=previous swing hi=previous resistance=potential resistance/rbs] zones, unbreecehd fibs and trend lines.

Looking at Monthly chart there are 2 obvious near-term previous imbalances of demand/supply and supply/demand zones. These are a. the previous swing lo zone at the current yearly lows (3505) tested previously in September 200 thru January 2002 and before that in Feb 1993. b. A previous swing hi/lo zone from Jan 1997-Oct 1998/Nov 2005, that probably extends somewhere between 7045-7235. Just above this zone is the 50% fib of the current total 2.1162-1.3505 fall, @ 7325.

Turning to the Weekly chart and just above current price is a previous minor swing lo zone (=potential sbr) that extends 6774-7115 and in that zone resides the 50% fibs of the 0395-3505 and 0157-3505 falls @ 6945 and 6825 respectively. The overlap with the Monthly previous swing hi/lo zone (= potential resistance) discussed above is 7045-7115. Above here and another previous swing lo zone (less minor) extending 7436-7796 in which the 61.8% fibs of the said falls reside @ 7756 and 7606 resoectively, and below them the 76.4% fib of the more recent 8658-3505 fall. Thereare probably 2 x trend lines on this t/f, both some way off current price but shown on the screenshot below.

Looking at the Daily chart price is at the top extreme of the previous swing hi zone extending 6582-6745 and any break above this will encounter the potential sbr and other factors outlined on the Weekly chart analysis above. Below here and price found support @ or around the ascending support trend line joining swing lows in the move up from 11th March this year. A previou swing lo zone extends 6035-5980, ..5980 being the 23.65 of the 3505-6745 rise that held for the current run up to Friday's hi following the fall from 6745 that began on 30th June. Below there and 5942-5793 is previous swing lo zone. Should the current 6745 hi be breeched to the upside I will re-drwa a fib on this t/f from the low @ 5793.

On the 4hr price is at the top extreme of the previous swing hi zone 6660-6745 that co-exists with the daily prev swing hi zone detailed above overlapping 6660-6745. Friday's hi breeched the top of the ascending price channel that has developed as price has recovered off 5980 lows following the fall from 6745 that began 30th June. Below here and there exists a previous swing hi zone that extends 6585-6555 (-6523 possibly) with the 23.6% of 5980-Friday hi's 6732 @ the same place as the 38.2% of the 6262-6732 rise, - 6553/55. Below here and a previous swing lo zone begins at the 50% of 5980-6732 , - 6355 extending down to 6307 with another previous swing lo zone immediately below that 6038 to that 6262 Lo, the 61.8% of 5980-6732 at the6265 area.

Fibs shown on this t/f are 5980-6732 and 6262-6732 rise. Thereare also probably 2 ascending potential support trend lines.

Finally, the 1hr chart and below current price sees a previous swing hi zone (potential rbs) extending 6583-6555 (-6535 possibly) [and more recently 6573-64] in which the 38.2% 6337-6732 and 61.8% friday's b/o level 6470 - 6732 reside @ 6581 and 6570 respectively. This previous swing hi zone is co-existant with the 4hr prev sw hi zone discussed above. Below here and there is an abvious previous swing hi zone not marked on the screenshot because it is was breeched from the upside down to the post U.s GDP data b/o level but may act as potential rbs on any re-test, irt extends 6524-6498. 6490-70 is the previous swing lo zone around Friday's post u.s GDP # b/o level and the 61.8% 6337-6732 resides near the top of the zone @ 6481. The previous swing lo zone 6348-6337 and 6333-08 both co-exist with previous swing lo zones on the 4hr t/f.

A rising potential support trend line is also shown on this 1hr t/f.

 

[bbmac]

Trading rules that you ignore at your cost.

I was looking in on an active gbpusd thread over at FF.com on friday and in amongst the usual ego clashes, nonsense calls and dubious analysis a lot of participants were shorting the obvious strength in the pairing as it stalled @ a 6573 hi ahead of the U.s GDP # release. What was interesting was the convinction they had in predicting a prolonged fall in the pairing completely ignoring both the obvious uptrend, momentum and sentiment, let alone the upocoming potentially market-moving data.

What always amazes me is the effort put into and subsequent agonsing over the likely future near-term direction of an instrument, with definative and absolute predictions made with high confidence, ignoring 2 cardinal rules of trading.

a. The market does not care what we think
b. Trade what you see, not what you think
c. Buy strength/sell weakness
d. The trend is your friend.

As Mark Douglas explains, '... you do not need to know where price will go next in order to make money.' I often short an uptrend/buy a downtrend but do so knowing the character of the trend and have a realistic expectation of the size of the likely pullback based on the character to that point. Indeed some pullbacks do morph into prolonged/extended pullbacks/consolidation and complete reversals but in general terms contra-trend trading should consider

i. The character of the trend to that point
ii. The R:R potential to the nearest sbr/rbs above/below the pullback entry that may see the ' with trend ' direction re-commence/continue. This could sensibly be considered as the 1st target.
iii. The likely strength of the potential support/resistance at which a contra-trend entry is found.

G/L

 

[alan5616]

bbmac,

Why the overkill with the analytics?

Who gives a damn what cable did from 1997? All that matters, for most traders, is what is happening now. The £/$ has been in an uptrend April. Fibonacci levels, pivots etc. are rather meaningless. If the momentum is with a currency, then it is.

If the central banks and major players feel that Sterling is a currency that they want to buy then Fib levels, and all the rest of the mumbo jumbo, have no influence on their desire to buy. Price action is the only true indicator of the bullish/bearish attitude towards a currency.

 

[poborsky]

This is my longer term analysis of where GU is likely to go. The coloured portions are simply areas where it likes to spend some time before breaking s/r and moving to another area. I believe that if we see another up move through resistance and respect of the upward trend line then the chances are of a move to the 1.75 zone. Likewise a failure to break up and a move down to 1.60 and below is more probable.

 

[bbmac]

bbmac,

Why the overkill with the analytics?

Who gives a damn what cable did from 1997? All that matters, for most traders, is what is happening now. The £/$ has been in an uptrend April. Fibonacci levels, pivots etc. are rather meaningless. If the momentum is with a currency, then it is.

If the central banks and major players feel that Sterling is a currency that they want to buy then Fib levels, and all the rest of the mumbo jumbo, have no influence on their desire to buy. Price action is the only true indicator of the bullish/bearish attitude towards a currency.

Alan, a strange and niaive post !! You give a fundamentally based view of the potential for future movement in currency pairings, based on the larger participants ability to move/initiate a move in a market with supply/demand. The ' overkill with the analytics ' as you put it is the current technical position across the main t/f's down to 1hr insofar as the very real and meaningful phenomenon of such demand and supply and their previous near term imbalances and other technical factors (fibs and trend lines) that can have an influence over price in the future as they have done in the past are concerned, reflected on a chart.

Analysing where the most likely areas at which participants/volume will enter and move a market from a technical persepective is vital to finding the highest probability areas at which to act at a technical 'set-up' whose trigger is individual price action itself. Where these 'zones' and factors co-exist on t/f's above the main t/f I look at in this respect (1hr) is also useful in finding more confluence and therefore potentially stronger areas. Such analytics far from being '...rather meaningless' are proven again and again to provide high probability turning points for market entry.

Your comments totally seem to ignore the technical persepctive of potential support/resistance upon which a lot of traders base their trading decisons/influence their trading decisions, and I would strongly argue that contra to your statement that

'...If the central banks and major players feel that Sterling is a currency that they want to buy then Fib levels, and all the rest of the mumbo jumbo, have no influence on their desire to buy....'

Support and resistance plays a key part in the overall market comprised of disparate participants analysing it both from a technically and fundamentally based persepective.You further state that;

'...Price action is the only true indicator of the bullish/bearish attitude towards a currency.'

and it is exactly this that can provide the trigger for high probability market entries at the areas indicated by the '...mumbo jumbo,' as you put it-lol

Finally, your comment '...Who gives a damn what cable did from 1997' I agree the dates don't matter but in your reference to my analysis of the monthly chart, I would argue that any trader on the daily trigger would be interested to know that the potential support zone that exists on the weekly chart around the current yearly low zone also co-exists with a monthly potential support zone that has been tested in that area and held twice before. This extra information gives such a trader looking to see what price does if that potential support zone is tested again the fullest possible information on which to make a trading decision.

Thanks for your input to the thread.

 

[bbmac]

This is my longer term analysis of where GU is likely to go. The coloured portions are simply areas where it likes to spend some time before breaking s/r and moving to another area. I believe that if we see another up move through resistance and respect of the upward trend line then the chances are of a move to the 1.75 zone. Likewise a failure to break up and a move down to 1.60 and below is more probable.

Thanks for the analysis, the scenarios you outline are in line with the current market chatter/commentaries that I have seen lately, and an upside break past 6745 cetainly opens up the 50% of the main 2.1162-1.3505.

 

[poborsky]

You are welcome. I also believe that the gdp news on friday was of significant importance and may turn out to be one of those moments that give momentum to market sentiment. Not the gdp news for Q2 but the revising of earlier figures. I think we are going to see dollar weakness after this weekend when the figures have been digested by the analysts.

 

[bbmac]

Support/Resistance-put it another way.

What is Support and Resistance? May seem like an obvious question but when put in another way becomes ultra-clear. Support and Resistance represented on a chart are merely imbalances of supply/demand or demand/supply. It is supply and demansd that moves a market and is a representation of buyers/sellers and the imbalance of the volume of one over another. The former is represented by a Fractal Swing Hi, the later by a Fractal Swing Lo. These previous Price pivots show where support (demand)/resistance (supply) actually occurred on a chart, unlike the other mainly used factors of Fibs and Trend lines which are projections of where it may occur.

Confluence is key to finding the highest probability zones at which there may be sufficient market participants/volume to move the market in your favour should you decide to enter the market @ a set-up / price action trigger.

This confluence is provided both by

a. The confluence of a previous price pivot across more than one t/f
b. The confluence of other potential support/resistance factors such as fib retracements/extensions and trend lines

For eg: Should you operate mainly on the 15min chart to find 'set-ups/price action triggers' you should be looking for potential supp/res/sbr/rbs on the 1hr chart but also have a view to (at least) the 4hr chart looking for when a 1hr previous price pivot (previous obvious near-term swing hi or lo) also co-exists with a 4hr previous price pivot, and/or other factors such as fibs/trend lines. the area where a 1hr zone overlaps with a 4hr zone is potentially the area at which the strongest support/resistance may occur lest there be another more obvious area with the confluence of other factors mentioned above.

A previous obvious near-term swing hi or lo on any time frame is:

Swing Hi -the area between the highest candle close and highest candle hi of the fractal swing hi.
Swing Lo- the area between the lowest candle close and lowest candle lo of the fractal swing lo.

... these areas form the potential Supp/Res/SBR/RBS zones on the higher t/f to that on which you are looking for set-ups.

G/L

 

[alan5616]

What is Support and Resistance? May seem like an obvious question but when put in another way becomes ultra-clear. Support and Resistance represented on a chart are merely imbalances of supply/demand or demand/supply. It is supply and demansd that moves a market and is a representation of buyers/sellers and the imbalance of the volume of one over another. The former is represented by a Fractal Swing Hi, the later by a Fractal Swing Lo. These previous Price pivots show where support (demand)/resistance (supply) actually occurred on a chart, unlike the other mainly used factors of Fibs and Trend lines which are projections of where it may occur.

Confluence is key to finding the highest probability zones at which there may be sufficient market participants/volume to move the market in your favour should you decide to enter the market @ a set-up / price action trigger.

This confluence is provided both by

a. The confluence of a previous price pivot across more than one t/f
b. The confluence of other potential support/resistance factors such as fib retracements/extensions and trend lines

For eg: Should you operate mainly on the 15min chart to find 'set-ups/price action triggers' you should be looking for potential supp/res/sbr/rbs on the 1hr chart but also have a view to (at least) the 4hr chart looking for when a 1hr previous price pivot (previous obvious near-term swing hi or lo) also co-exists with a 4hr previous price pivot, and/or other factors such as fibs/trend lines. the area where a 1hr zone overlaps with a 4hr zone is potentially the area at which the strongest support/resistance may occur lest there be another more obvious area with the confluence of other factors mentioned above.

A previous obvious near-term swing hi or lo on any time frame is:

Swing Hi -the area between the highest candle close and highest candle hi of the fractal swing hi.
Swing Lo- the area between the lowest candle close and lowest candle lo of the fractal swing lo.

... these areas form the potential Supp/Res/SBR/RBS zones on the higher t/f to that on which you are looking for set-ups.

G/L

Hi bbmac,

I have no argument with your commentary regarding S & R levels. They are an essential element for making informed trading decisions. I wasn't being naive by dismissing Fib levels as "mumbo jumbo". Sometimes they work- sometimes they don't.

I prefer to keep my charts as simple as possible and manage to make a good living, as a full time day trader, without them.

 

[bbmac]

Mon 3rd Aug

Price has found resistance overnight in the lower part of that Weekly previous swing lo=prev supp=potential sbr zone discussed in post # 2 above [ '...Turning to the Weekly chart and just above current price is a previous minor swing lo zone (=potential sbr) that extends 6774-7115.. ' ] following a new high @ 6776 above friday's close and outside the previous sw hi =prev res=potential res zone extending to 6745 present on the 4hr and daily charts.

Potential resistance to 6750/55 then around current 6776 highs likely ahead of 6800, the latter area a mixture of stops and offers say Mni.

Some minor Uk data later this morning.

G/L

 

[bbmac]

market chatter

0720 GMT [Dow Jones] A new month may have started but don't expect new currency positions. As UniCredit says, despite Friday's GDP data there is little sign that investors are prepared to stick their necks out just yet. "Investors will still refrain from implementing strategic positions in the runup to US unemployment report on Friday," it warns. (NEH)

 

[bbmac]

The 1hr screenshot below shows where the pairing found support (a previous 1hr swing lo=prev supp=potential supp zone) for the run up to new highs just short of 6800.

Price reamisn above Mthly, Wkly and Daily calculated pivots, the latter calculated from friday's values.

G/L

 

[bbmac]

Set-up of the day so far as price pulls back off the 6800 area and finds support in the previous 5min swing hi zone co-existiong with the previous 1hr swing hi zone shown in screenshot above (previous sw hi=prev res=potential rbs.) A quick +30+ pip run up to 68325/30 area, and around that 50% of the 2.0157-1.3505 fall. Mni taking about offers in the 6830/35 area now, but the bulls seem to be in charge.. no surprise I guess after the Daily, Weekly and Monthly candle closes on Friday.

The 1min hidden divergence and band deviation based set-up is shown below (1min Re-entry 1)

G/L

 

[dan606]

When do you think we will turn around because there is just no stopping it!

 

[bbmac]

When do you think we will turn around because there is just no stopping it!

well there is nothing that can help us on the 1hr through to daily chart in terms of previous swing hi or lo zones. The nearest of these, and as discussed in post 2 is on the weekly chart which price is in at the moment.

'...Turning to the Weekly chart and just above current price is a previous minor swing lo zone (=potential sbr) that extends 6774-7115 and in that zone resides the 50% fibs of the 0395-3505 and 0157-3505 falls @ 6945 and 6825 respectively...'

In these situations where the zone is wide like a weekly zone I am looking for the confluence of other factors to help like fibs, trend lines, calculated pivots and bids/offers, and also price's relationship to it's average daily range (current average 200, today 158only) for any hi-probability contra-trend trading opportunity.

As to where it might top, I have no idea, I just trade the set-ups and until price action tells me otherwise on the t/f's I look at, ....with an obvious biais for 'with trend' positions.

6850 for eg is in that prev wkly zone and is Wkly R1 calculated pivot with mni talking about offers there if 6830/35 gives,...but it's a bid market and any offers are being quickly absorbed, so for me, I need a pretty perfect reversal set-up and probably supporting reversal set-ups on the t/f (s) above my trigger t/f to short.

G/L

 

[bbmac]

Mni update

CABLE: Extends rally to $1.6851, the move meeting the reported sell
interest placed around the $1.6850 level. Rate currently trades around
$1.6845. A break and clear above $1.6850 to open a move toward $1.6880.
Support now seen back at $1.6815/10, more toward $1.6790 with stops
below.

 

[bbmac]

You might recognise the set-up essentials from post #14 and speaking of a biais for ' with trend ' positions, price pulls back from 6850 to set-up again on 1min with a hidden div/band deviation based re-entry set-up shown below that gave 6832ask entry for more upside gains and a new intraday HH. the market is very bid and offers continued to get absorbed with buying pressure at the moment.

(1min Re-entry 2)

 

[bbmac]

The 1hr screenshot below is the current position as I see it in respect of previous obvious near-term imbalances of supp/dem (swing hi's) and dem/supp (swing lo's) and fibs/trend lines on this t/f.

The fibs are drawn to the current hi from 6337, 6471 and today's current lo @ 6694.

G/L

 

[bbmac]

As if price action wasn't telling us all we need to know re trend at the moment, this is the current position re the ADX (20setting) across the 5min + t/f.s

G/L