BBmac's Gbpusd thread

[bbmac]

Qe - decision due later today

It will be interesting to see the U.k industrial and manufacturing production data later this morning, and whether this like all recent surveys have suggested a pick-up and expansion in U.k economic activity. Mni services y/day 56.9 for example...Indeed many suggest that the -0.4% Q3 Gdp figure is simply wrong and will be revised sharply upwards with Q4 showing growth albeit small?

The Fed (Fomc) suggested stable rates for time being at it's meeting yesterday, and tghis is likely to be the case in the Uk , so the question is; Will the Boe/Mpc reists further additions to the QE programme fearful of storing up future inflation when the economy has alraedy started growing -or- As some are suggesting will they expand it? some are suggesting an additional £50Bln taking it from current £175 to £225Bln.

It's worth remembering that before the bad -0.4% Q3 Gdp there were implicit suggestions that it had topped out at £175Bln, but also that there were votes in August for an additional £75Bln when it expanded to £175 from £125Bln, and that the bank had been stung by criticisisms of it's slowness to act during the height of the crisis and beyond not see-ing the downside risks, concentrating on the upside inflation risks too much. Bear in mind too that the U.s, Japan, France, Germany returned to growth in Q3 with Uk lagging behind.

On balance, some expansion in QE seems the most probable outcome and the decision will be announced @ 12pm gmt later today. Likely £ weakness with a £50Bln QE expansion would be the conventional wisdom?

G/L

 

[bbmac]

Manuf prod m/m 1.7%, Ind prod m/m 1.6% are the numbers released...certainly ex mpc member Blanchflower is certain as to action needed:

http://www.telegraph.co.uk/finance/...obs-before-the-economy-falls-off-a-cliff.html

G/L

 

[bbmac]

30mins to go to Uk Boe/Mpc announcement

Most likely reactions to following scenarios re Boe/Mpc decisions

1. Rate n/c, Qe increases by £25bln...hard to say could go either way

2. Rate n/c, Qe increases by £50bln +, likely knee-jerk £ sell-off

3. Rate n/c, Qe does not increase staying at current £175bln...likely £ strength knee-jerk reaction

* It is very unlikely that there will be a rate hike?

Anything can happen, trade what you see...not what you think.

G/L

 

[bbmac]

U.s Nfp data later.

So Boe/Mpc fudged it and did something (£25bln addition to Qe programme) probably the least they could...fearful of being accused of not reacting to the downside dangers re Q3 gdp.

Roll on, U.s Nfp due later....generally expansive data from the U.s of late as Q3 showed growth in gdp. As usual it will be the revisions of previous, un-emp rate, manufacturing jobs and deviation from the -175k forecast that will determine market's reaction. Un-employment is of course a lagging indicator but the initial claims fell to a 10mth low yesterday with ADP forecasting -203k against -263k in the headline # last time. Consensus seems to be for -175k with un-emp rate rising to 9.9% from 9.8%.

The 3 main scenarios are:

a. Headline # comes in around forecast (possibly with positive revision to last month's headline # and only 0.1% or no jump in un-emp rate of 9.8%...probable indecisive -$ strength on knee-jerk reaction
b. Headline # comes in considerably less than forecast with positive revision to last month's headline # and stable un-emp rate....probable $ strength on knee-jerk reaction
c. Headline # comes in higher than previous month with or without revisions to previous month's headline # and an increase in un-emp rate...probable $ weakness on knee-jerk reaction.

Anything can happen of course, and there are other scenarios. This is historically the most volatile data release on the calendar, so as usual trade what you see, not what you think, and if you don't understand what you see/it is not clear-stay out, is the best advice for a tech trader.

G/L.

 

[bbmac]

Just over 30mins to nfp

My favoured tactic (simplistically put below) post nfp release if, and only if there is a clear direction taken by the market in reaction to it is to either;

a. price goes up-sell first hi-and buy first pullback @ any retest of broken resistance

-or conversely-

b. price goes down-buy first lo-and sell first pullback @ any re-test of broken support

As I say above this is a simplistic explanation and whether I actually do it depends on a number of other factors, not least having a claer trigger set-up (s) to do so , but it is a typical post news/data play that may develop (or not.)

G/L

 

[bbmac]

w/c M 9th Nov 09

The Daily candle on Friday and the weekly canle closed-bullish.



Price closed friday in an uptrend 1hr/4hr, with daily t/f in a weak uptrend having seen a H, HL, LH then another HL, finding resistance at the descending potential resistance trend line on that t/f at the bottom of the previous swing hi=previous resistance=potential resistance zone on that t/f. The weekly t/f is in a range consolidation at the moment.

The 100sma remains above the 200sma on 1hr, 4hr and daily t/f although below on the weekly, above on the monthly.



Above current price and 6665-92 area is a previous 4hr and daily swing hi = previous resistance = potential resistance zone that intersects another daily t/f previous swing hi = prev res=potential res zone running 6689-6736 area in which the 76.4% fibb of the 7044-5707 fib resides @ 6724 area.



Below current price and 6312-6260 is a previous 1hr/4hr swing lo=previous support=potential support zone. Below that the 50%, 61.8% and 76.4% fibs of the 6260-6635 rise up @ 6447, 6403 and 6348 respectively, and below those a previous 4hr/daily swing lo zone resides @ 6302-6260



G/L to all for fothcoming week's trading.

 

[bbmac]

$ weakness, a gap up @ new week's open and more with 1hr/4hr trend price action has resulted in an upside breech of the 76.4% 7044-5707 and descending potential resistance trend line on the daily t/f.Price has reached 6800 area where it has encountered some supply, correct at time of writing. In respect of further potential resistance to the upside there is nothing obvious on 1hr/4hr chart and even the daily until the previous swing hi=prev res=potential res zone around the current yearly hi, 6990-7044.

G/L

 

[bbmac]

Re post above, price has entered the previous swing hi=previous resistance=potential resistance zone on the weekly t/f...of course this does not help at the moment if your trigger is anything below the Daily and looking for a short.

Speaking of looking for shorts, it never ceases to amaze me how many traders are constantly trading counter-trend looking for cricket scores. There has been a right old bun fight over @ FF.com's gbpusd thread recently (nothing new there it is very ego driven) culminating in it's iluminati (!) leaving the thread over an ongoing dispute as to whether the trend is up or down (lol) and the validity of analysis/trading calls made in that respect.

Many keep shorting it in the hope of a complete reversal, unable to understand that the technical trend is up on so may t/f's even though the £ fundamental evidence is weak (such as Q3 gdp) fogetting that the instrument is also half $ and that any strength in it may have more to do with $ weakness as opposed to intinsic £ strength. As technical traders, it matters not (interesting though the prevailing fundamental environment re U.s and U.k may be..) all we need to know is what the technical trend is on the t/f's of interest to us (and whether this trend is with or contra any that exists on the t/f's above those,) not necessarilly the fundamental reasons behind it. Technically the reasons for a trend are that there are more buyers than sellers or vice versa.

G/L

 

[gamma]

A useful weapon to add to ones arsenal is the USD index.
Helps to see if cable is strong or USD is weak.

 

[kaisen]

A useful weapon to add to ones arsenal is the USD index.
Helps to see if cable is strong or USD is weak.

Thats a good idea!

 

[bbmac]

A useful weapon to add to ones arsenal is the USD index.
Helps to see if cable is strong or USD is weak.

Good tip, Thx.
------------------------------

Cable found supply @ 6842 area @ 116% L-H of it's average 20day pip range , and is now 100pips off that current i/day Hi...The near-term obvious previous imbalances of supply/demand=prev swing hi's = prev res=potential rbs -and- the near-term obvious previous imbalances of demand/supply=prev sw lo=prev supp=potential supp, as wellas the unbreeched fibs of moves up to current 6842 hi from 6260(yellow,) 6464 (orange,) and 6516 (grey) and unbreeched ascending potential support trend lines on this 1hr t/f are shown below.

The zones marked as a and b are co-existant on 4hr t/f also

Above current i/day hi @ 6842 and price remains in the previous sw hi=prev res=pot res zone on the Weekly t/f discussed in a post above here today, with that 6990-7044 prev sw hi=prev res=pot res zone on Daily t/f at the top of that weekly zone.
G/L

 

[bbmac]

Strong sell-off in the asian/overnight session from a 6788 Hi, finding support inbetween the 61.8% 6464-6842 and 76.4% 6516-6842, around the 100hr sma, at the ascending 1hr potential support trend line....Recovery in the late asian/early london session off 6599 lo, despite worst than forecast trade balance data has seen price trade through the 38.2% of the total 6842-6599 current drop.

The 1hr chart as I see it in respect of potential support/resistance factors is below;

Zones marked as a,b and c are co-existant on the 4hr t/f.

G/L

 

[bbmac]

set-up of day so far

Price pulled back off point x, finding support at the previous 5min swing hi's at which point a hidden divergence based 1min re-entry (to next t/f trend after a pullback) set-up developed at point y indicating a hi-probability entry into the next higher t/f-5min/growing 15/30min uptrend. At point of entry 5min macd signal line was crossed above it's axis and next higher t/f-30min was pointing up (as was 1hr) so a nice ' with trend ' trading opportunity at this potential rbs zone.

It is one of only 2 trades I have done so far today, even on the 1min trigger you have to have the patience and discipline to await the right set-up (s.)

 

[bbmac]

A favoured set-up

re set-up above

it is one of my favoured set-ups, and can indicate a hi-probability 'with trend' tradinhg opportunity across any time frame combination..ie price is trending on a t/f per overall price action-peak/valley analysis, and begins to pullback...look for an obvious previous swing hi (s) zone -uptrend, swing lo (s) zone-downtrend on this trending t/f (better if multiple swing highs or lows before it broke with trend as was therefore stronger resistance/support and therefore potentially stronger potential rbs/sbr respectively). If price re-tests the said potential rbs/sbr zone, drop down to the lower t/f and look for a good price action trigger with hidden divergence in the oscillators to get back ' with the next t/f trend ' after the pullback. It is useful also to ensure that the macd signal line is crossed above it's axis-uptrend/below-downtrend on the trending t/f, and at least pointing in direction of trend on t/f above that, if not already crossed above/below it's zero axis. It is also useful to ensure tha the set-up occurs at ;

a. uptrend - a HL or L on the t/f it sets-up on, also corresponding with a HL on the trending t/f
b. downtrend - a LH or H on the t/f it sets-up on, also corresponding with a LH on the trending t/f

In respect of the potential rbs/sbr zone, I like to see this nearest to current price action ie: a near-term prev swing hi/lo zone, not way back in time on the trending t/f.


These technical conditions make for a very high probability trading opportunity.

G/L

 

[bbmac]

I was posting above whilst waiting for this the 3rd and final trade I have done today to play out for some pip gain (am flat now having just booked the profit)

The 1min regular bearish divergence based Reversal set-up @ the potential res =50% fib of the 6842-6599 fall, see pic below

There was no real repeating Reversal set-up on 5min to support this 1min set-up (bearish div in 2 of the 3 oscillators though) but on 15min a hidden divergence based Re-entry (to next t/f trend after a pullback set-up)

So why didn't I hold this set-up for more pip gain? Well anything can happen of course and if I had have done I would have moved stop to break even, but I chose to book profit beacuse the 15min supporting Re-entry set-up (Re-entry back into 1hr gowing ?downtrend) came @ a H after 2 x HL on that t/f, ie not the optimum position for a Re-entry (to next t/f trend after a pullback) set-up (as explained in posts above) Also 1hr off the 6842 HH has printed a HL then LH then L, so not a convincing downtrend on that t/f yet.

I would have been more inclined to hold for more gain (ie a with 1hr downtrend follow thru to a LL possibly?) had the supporting 15min Re-entry developed at a H with only one HL not 2xHL beneath it, although the set-up (s) were @ a corresponding LH on 1hr, into whose downtrend the 15min Re-entry set-up indicated a hi-probability entry after the pullback off 6599 Lo.

The 1hr is shown below:

G/L

 

[bbmac]

Was just packing up for the day when:

As the sell-off described in the post above continued, the 5min began to develop a downtrend off that 6723 area, and crucially the first L was lower than the last HL of it's uptrend to that 6723 High...so that as price developed and a 2nd Lh occurred after a LL on this 5min t/f...a 1min Re-entry set-up became a hi-probability trading opportunity particularly as the 1hr candle had closed as a bearish engulfing off that Hi...sure enough a with trend follow thru to a new LL occurred..

The 1min Hidden-divergence Re-entry set-up is here and note it occurred at a H on that t/f and a LH on the 5min into whose downtrend the set-up indicated a chance to get 'with trend' after the pullback.

Note on the 1hr chart below showing the bearish engulfing candle that, as detailed in posts above the first L of it's downtrend, unlike the 5min decsribed here, did not print below the last HL of it's previous uptrend!!

Understanding what price is doing/telling you on each t/f of interest to you can result in dramatic improvements in the strike rate of your trading edge by only acting on it in the highest probability overall price action conditions.

G/L

 

[bbmac]

Final look @ 1hr chart today

Final look @ 1hr chart before own trading re-commences tomorrow morning London session, and 2 x HL off the current i/day low @ 6599and a new uptrend on that t/f...the first H coming @ a previous swing lo=prev supp=potential sbr, see-ing a sell-off to the 2nd HL.

Previous swing hi/lo zones decsribed as a, b and c are co-existant on 4hr t/f.

G/L

 

[bbmac]

The current intraday lows saw a hidden-divergence based 1hr re-entry (to next higher t/f after a pullback) set-up, screenshot below

@ the potential rbs of the previous 4hr swing hi = prev res = potential rbs zone pictured below

The 1hr Re-entry set-up (into 4hr uptrend) came @ a L on 1hr and 4hr following LH's on both t/f's so not @ an optimum HL or L on 1hr/HL on 4hr..which would have been better, this said there was a good individual price action candle trigger and the previous 4hr swing hi zone was multi-tested.

G/L

 

[bbmac]

Weds 11th Nov 09

1hr in a definate uptrend now after 3 x HL with Uk employment data due ' 0930am and Boe Qtrly Inflation Report @ 1030am gmt.

The 1hr chart as I see it, in respect of potential supp/res factors is posted below, correct at time of posting.

G/L

 

[bbmac]

4hr is in a 'general' albeit imperfect uptrend,.. after a LH then a L off the last HH...you can see the previous swing hi = previous resistance = potential rbs zone (now a potential supp zone) at which demand was found for a further attempt up after the pullback from 6842.

G/L