GBP vs USD what next?

[hammer]

Hi,

New to trading and only really been trading the dow but due to me having a business on the side am constantly looking at the dollar/pound rate. Trying to apply TA to it. I figured it would go up to about 1.89 or keep going up till mid feb before coming down. This conclusion has come from discussion with my business partner who knows more about forex than i do. Thought i would try to do my bit and use some TA to see what could happen.

Now the intro is done!

Is it already on its way down? Last week it hit 1.858 before closing on Friday at 1.798. This week it failed to hit 1.858 and only hit 1.8525 although it did close higher on Friday.
The only indicator ive used so far is the 10/20/40 SMA and on the daily chart the 10 period SMA has hit the 20 period SMA. Possibility of a trend change? At least in the short-term. Haven't got much further in my TA education!
The SMA prob don't tell me anything yet, but don't know what TA to use next. Can anyone give me a hand?

Thanks :cheesy:

 

[mheitkoe]

Hello Hammer,

I would be happy (and rich) if I could tell you if it's for sure on it's way down.
It might be - It might be not.
I am not familiar with the Technical Indicators you are referring to cause I simply don't use any of them.
But I can give you a hint: Trade what YOU see!
I can share with you what I see: I trade Forex on a 60 min Chart. On Friday there is a Breakout of the Trading Range and from there Prices moved nicely down to the Rook Hook and then corrected till the end of the day. The first Correction Bar created the Ross Hook.
So - what's next? Most likely prices will move down towards the Ross Hook and maybe even further. If they do, the downtrend continues.
If they don't move down to the RH, they might form a 1-2-3 low. If then prices break out of #2 of the 1-2-3, we will see an emerging uptrend.
If the #2 of the 1-2-3 is not taken, we will see prices moving into a trading range again.
How to trade it:
if you are an agressive Trader you could now place a sell stop if the next bar trades through the low of the previous one (this is called The Traders Trick Entry).
If you are a more conservative Trader place a Sell Stop right below the Low of the Ross Rook.

If you want read more about the Ross Hook and Traders Trick Entry you find free White Papers at http://tradingeducators.co.uk
Under Resources you will find papers about the Law of Charts and the Traders Trick entry.
On the same site you find as well a Free Trading Manual with lots of other valuable Tips and Tricks. http://tradingeducators.co.uk/free_trading_manual.htm

Hope this helps

 

[spreadbet]

GBP vs USD what next?


Don't over analyse just go with the flow

Cheers

spreadbet

 

[kevinmcm]

Here are the gaps created on Friday during the down move, I left a lot of points on the table there, seriously bad case of not running a profit


GBP/USD Gaps from Friday.

Current price is around 1.8260

Below this level :
------------------------
1.8234 - 1.8244 : 10 <-- just checked, covered now

1.8191 - 1.8199 : 8 <-- now covered ( Monday a.m. )



Above this level :
------------------------

1.8281 - 1.8286 : 5

1.8326 - 1.8331 : 6

1.8362 - 1.8373 : 9

1.8454 - 1.8464 : 10

By the time I can trade in the morning, its quite likely that the gap just under 1.82 will have been covered as well. Who knows, maybe even a double botton around 1.1870 for a nice ride up ?

Kevin.

 

[kevinmcm]

It looks more down than up right now. Levels to watch are 1.8170 then 1.8150, if that goes it could force another 50-100 points off.

Kevin.

 

[mheitkoe]

Dear Hammer,

Did you follow the trade?

1.) If you followed the “conservative approach” (Breakout of the RH) you didn’t trade.

2.) If you followed the aggressive approach, you went short @ 1.8254 using the Traders Trick Entry (TTE).
You covered 50% of your position when you saw 20 pips profit (=$200) and and moved the stop for the remaining position to b/e
you got stopped out @ 1.8254.

Now prices are in a trading range and we wait a Ross Hook after the breakout.

Regards Mike

 

[mheitkoe]

Hello,

now we have a perfect breakout of the Trading Range.
A Trading Range must consist of more than 10 price bars. Usually between bars 20-30 there will be a breakout to the high or the low. Here we have a breakout at bar 25 to the low.
We are now waiting for the Ross Hook.

We will see ;-)

Mike

 

[hammer]

wow, so much info! I didn't trade it mheitkoe, am prob too new to this whole game to jump in with forex, it moves too much too quickly and i don't think i have enough capital or confidence to trade it! But im definitely keeping up to date and will papertrade it for a while before jumping in. Concentrating on the dow at the moment.

Never heard of the Ross Hook so thanks for the link to the manual (another trading book on the list to read!)

Thanks :cheesy:

 

[mheitkoe]

Hi hammer,

your welcome.
I will post the next 2 or 3 steps I would do in the GBP vs USD using the Joe Ross method - if you are interested to follow it.
It looks like we will get another Ross Hook but we have to wait until the bars completes.

Mike

 

[options]

Hammer.
If you trade the dow you are gonna love fx. Much smoother running as opposed dow jerkiness.

You can open a mini account these days for £300. Most are in usd or eur. Fxcm allow you £ accounts as well. No slip on stops even if market jumps 50 pips or so. Fxcm are the only ones that guarantee this as far as I know. Certainly the 2 main gbd/usd and eur/usd trend better and longer. Not so much quicker it's just that they carry on going. So much so that you'll be stopping yourself out of trades because you'll be expecting a pullback a la dow.

All the sb's run fx, but the spread varies slightly.

Pay your money take your choice.

Do a search on the boards. I think Ftse Beater started a thread on Joe Ross.

 

[eminem]

Options, I have been looking at FX recently, what is the best timefreame for charts - from what I have read people seem to look at longer timeframes, eg 15/30/60 minutes? Is this normal? I was looking at a 5 min chart of the USD/GBP and using an MA cross got a decent signal to short at 1.8269 which would have produced and nice trade today. I am looking to trade intraday and not hold positions overnight.

Any feedback would be welcome.

 

[options]

Hi, Eminem.

"what is the best timeframe for charts - from what I have read people seem to look at longer timeframes, eg 15/30/60 minutes? Is this normal?"


Whatever suits your trading style. A 5 min chart will give you lots more signals, some good, some bad. Remember you have to beat the spread to start with. 30/60 min charts of course less signals, but because of how it trends will give you the better ride. I would say that most people use the longer time frame chart of 30/60 to give trend direction. Nothing to stop you having a 5 min chart alongside to take your entry from. Using multi time frame analysis will filter out some weak signals.

The beauty of fx is that you do not have to get in right at the start of a move. There is plenty of time to let the market tell you what is happening before getting on board. So where people say ma's lag. It doesn't matter. There are other ways of reading them in any case.

You can daytrade. You will not get the runs every day. I am an inherent day trader of futures so I understand where you are coming from. It's nice to bag a bit of profit daily. So do that for a while. Then once you get a trade on and you lock in profit, with stops set 25/30 pips away. Sit on your hands, and do nothing apart from adjusting the stops. You'll have a free ride in any case.

 

[Zenda]

Undecided!!

Early morning Set up - waiting for some indication of direction - No open positions yet but think things could happen! :!:

Soros tips US dollar will fall further
By Michael Mckee
27jan04
GEORGE Soros, who once made $US1 billion ($1.3 billion) betting on a drop in the British pound, said the US dollar may extend its decline in 2004 even as stocks rise.
When currencies drop they "tend to actually pick up speed" Mr Soros said at the World Economic Forum in Davos, Switzerland.
"Since the decline of the dollar in the short term is beneficial for the US economy, the authorities actually like it," he said.
The dollar has dropped 14 per cent against the 12-nation European common currency in the past 12 months and 9 per cent against the Japanese yen, buoying US exports while posing a threat to the economic recovery in Europe and Japan.
It has fallen 37.8 per cent against the Australian dollar since January 2003.
Even with the dollar's decline, the 73-year-old Soros expects investors to keep putting money into US stock markets.
The Standard & Poor's 500 Index, which rose 38 per cent last year, is up another 3 per cent so far in 2004.
The Nasdaq is up 6 per cent, after a 58 per cent gain last year.
A drop in the dollar makes US products cheaper to sell abroad, boosting American growth.
Exports climbed to a three-year high in November.
"Now, it's a very dangerous game because it can get out of hand," Mr Soros said.
"But at the moment, the Americans will not cooperate in any kind of intervention."
In 1992, Soros and Stanley Drucken miller, his chief strategist, earned about $US1 billion from the drop in the pound after the British government abandoned the sterling's peg to a basket of European currencies.

 

[Zenda]

Update

Position went Short - Cancelled Buy Order -moved stop to negate any losses hoping for it to continue it's decline - Unfortunately retraced and hit stop - Good news didn't cost anything waiting for another set up - .......? "Thats trading"

 

[eminem]

Thanks for the reply Options. I intend to look more into FX this year, seems to provide some good ranges if you can get on the right side of the moves and limit any losses with stops.

Cheers.

 

[Jdax]

I've just started gett interested in Forex and GBP/USD in particular.
I don't have a lot of experience. I've been loking at DAX / FTSE / Dow for a while and haven't made any money, in fact I've lost £500 in a year. However, I tend to trade a bit, make mistakes, take a step back, see what I can change and try again. I'm at a stage (I hope) where it's looking a lot better - but with an SB spread and smaller moves the risk reward is not always good.
Forex seems to react well to general TA and because the moves are bigger the risk / reward seems better than other markets. OK, the stop is important for Saddam type situations.
Can anybody tell me if the current big moves on GBP / USD and EUR / USD are normal or unusual ??.

 

[kevinmcm]

£ and € moves are very volatile at the moment. Pull up a daily chart to see the speed and size of moves realtive to previous moves. We have has 2 big, swift up swings and 2 big, swift down swings in January. Lot of -ve press about strength of € etc, and BoJ intervening dont help things.

 

[Jdax]

Thanks Kevin - had a look at the daily on Oanda Demo and see what you mean.
So the daily moves right now are 100 - 200+ but normally it's about what 50 - 100 ?.
The waves even on a 5m are a good size and seems to trend cleanly right now (using MA's and MACD). So the risk reward is good.
I guess when it's less volatile the waves would be smaller on a 5m timeframe, risk reward would be less so you'd need to switch to a higher timeframe. ?.

 

[WelshDragon]

gbp/usd direction

At the moment the gbp/usd has no direction except for slight curvues downward. This is until the outcome of Tony Blairs/ vote on top up fees, thats what the market is waiting for. If he wins that then the pound should start a rebound with short orders being closed out and longs executed. Brown made a comment today that he thinks Blair will win which has comfused the market alread as 2Jags has said he thinks Blair will lose the vote before.

If Blair does lose the vote then that could mean a possibly confidence vote for him and the pound going south.

My advice don't touch gbp/usd until this top up vote is all over.

 

[kevinmcm]

I think the near term direction of the £ has more to do with possible BoE rates rise and US holding rates. Top ups are not going to value/devalue the £ whatever the outcome. The investment from overseas will still happen regardless of the decision on top up fees, foreign money couldnt care about government policy on such matters, if the UK is offering a better investment opportunity then it will still happen and the £ will rise.

There are other factors involved but I dont see top up fees as one of them.

£/$ doesnt need direction, as long as its tradeable I dont mind what its doing.