JasperForex
Short

GBPUSD: Quintuple Top on the Cable

FX:GBPUSD   British Pound/U.S. Dollar
Last week the dollar weakened prior to FOMC, helping the Cable rise during the first three days of the week. The UK GDP coming out as expected also supported the rise; illustrating the economy is doing well. In the FOMC statement on Wednesday the FED referred to solid job creation and said there will be an increase in interest rates following 'some further' improvement in the labor market. There were however no clues as to the timing of the rate hike. Cable rose again on Friday, after a far below expectations US employment cost index , leading to a dollar sell off. With all the fundamentally bullish impulses of last week, price failed to break above and close above the key resistance at 1.567

On the technical side, the Cable is trading inside an ascending triangle for about three weeks, printing a quintuple top along the way. It dropped 65 pips after the last failed attempt to break this resistance. There is a confluence with this resistance level and the 618 retracement of the swing low that preceded the triangle. We also have clear regular bearish RSI divergence; indicating underlying weakness and possible trend direction change from uptrend to downtrend. If the pair would break below and close below the lower trend line of the triangle, I would go short. More conservative traders could wait for a successful retest of the broken trend line before entering the trade. Monday we have the UK manufacturing pmi coming out, which will no doubt give an impulse to this pair.

The stop would go 30 pips above the flat top. TP1 lies just above the low of the swing low that precedes the triangle. TP2 lies just above the next key support level. See the chart for details. In terms of trade management, when TP1 is hit I would take profit on half of my position and roll my stop loss to breakeven, enjoying a risk free trade towards TP2.

There are +/- 400 pips to be made (depending on where it breaks to the downside) and the trade has a reward – risk ratio of +/-3.0!
You don´t need to be a weatherman to know which way the wind blows - B. Dylan
DJC
a year ago
Absolutely solid. A lot can learned from this very clear and educated post. Many thanks Jasper.
+3 Reply
JasperForex PRO DJC
a year ago
Thanks, let´s see how it plays out :)
+1 Reply
airmac PRO
a year ago
in this pennant, doesn't price usually breaks to the upside?
+1 Reply
JasperForex PRO airmac
a year ago
Thanks for your question. There is confluence of the upper trend line, a key resistance area, a quintuple top, the 618 retracement of the swing low and clear RSI divergence. I go short only if the pair breaks below and closes below the lower trend line of the triangle, in any other situation (like a break to the upside) this trade idea becomes void and nothing will be risked.
+2 Reply
moneymaking
a year ago
Hey Jasper, Well come back. Great to have you back, hope you had a good solid month of trading. Nice setup by the way. All the BEST :)
+1 Reply
JasperForex PRO moneymaking
a year ago
Thanks for the kind words, yes last month was good to me, hope you made pips as well :)
Reply
moneymaking JasperForex
a year ago
Yeah mate, previous month was good. Let's hope for this month to be even better that the previous one :)
+1 Reply
Hi Jasper,
thank you first of all for sharing
i see the 0.618 confluence but i usually would think for a long for such a pattern
i am anyway waiting for a break before entering any position
also UK rate decision make me wait further before enter this currencies
thank you
+1 Reply
JasperForex PRO RiccardoBartolini
a year ago
Yep, totally agree, I also would enter a position only after a break. Thanks for sharing your opinion.
Reply
I don't trade on Mondays and i generally only trade GU.
Lots of news out today for the US, i believe USD weakness is around the corner although trying to get the American bulls to change direction is like trying to get someone of the crack-pipe.
If bad data today then GU is right on target for the 1.57500 ish level. Which is the level i've been looking for from the low 1.53
I've been scalping from the hits on the resistance area.. anyways.. good look folks !!
Reply
JamesDixonTobots JamesDixonTobots
a year ago
good look, hahhaah luck** lol Good looking also Jasper ; }
Reply
JasperForex PRO JamesDixonTobots
a year ago
Thanks for sharing your view and good look / luck yourself :)
+1 Reply
AbdulWasayChandio JasperForex
a year ago
hi how are you sir?
i start fresh. sir give me tip or how i can understand your chart and other so can you help me
+1 Reply
hi how are you sir?
i start fresh. sir give me tip or how i can understand your chart and other so can you help me
+1 Reply
JasperForex PRO AbdulWasayChandio
a year ago
Best tip I can give a fresh starter: go to the School of Pipsology and finish all the classes & tests. http://www.babypips.com/school
+1 Reply
CetinGuven
a year ago
It is very succesfull analyse, thank you very much.
+1 Reply
CetinGuven CetinGuven
a year ago
If EURGBP goes over 0.7030, i think GBPUSD will go to downside sharply.

+1 Reply
JasperForex PRO CetinGuven
a year ago
Thank you, but it´s only successful if we make some pips, let´s see how it plays out :)
Reply
CetinGuven JasperForex
a year ago
Im sure it will realize.
+1 Reply
Yahia.Awes
a year ago
Mooi Jasper!
+1 Reply
JasperForex PRO Yahia.Awes
a year ago
Dank je wel! Oh, I mean thanks :)
Reply
Yahia.Awes JasperForex
a year ago
Here is my take, waiting for divergence for real sellof.
snapshot
+2 Reply
Yahia.Awes Yahia.Awes
a year ago
I see a nice rising wedge in the make, in downtrend this is extra bearish... Could be seen as bearflag.
+2 Reply
JasperForex PRO Yahia.Awes
a year ago
Thanks for sharing your view on this pair here, the lower trend line of the wedge is equal to the lower of the triangle. Break below and close below = short. Any view on targets?
+1 Reply
Yahia.Awes JasperForex
a year ago
1.51 Channel support.
+1 Reply
Yahia.Awes Yahia.Awes
a year ago
If it meets channel at 1.52 also good.
+1 Reply
JasperForex PRO Yahia.Awes
a year ago
Thanks for sharing!
+1 Reply
Price dropped 60 pips since Asian open and is edging towards the lower trend line. Let´s see what happens...
+1 Reply
P_Parker
a year ago
Hi Jasper, nice Idea :-)
Do you wait for a Retest when a Candle closes under the lower Trendline?
regards
Parker
+1 Reply
JasperForex PRO P_Parker
a year ago
Thanks, I would advise everyone to follow the rules in their own trading-plan regarding this: semi-aggressive traders could short after a break below & close below, conservative traders could short after a retest of the broken trend line. Aggressive traders are already short (not me) :)
+2 Reply
P_Parker JasperForex
a year ago
Following your own Trading Strategy is very important! But first of all you have to develop that Strategy - thats why I asked :-)
Thanks Jasper
+1 Reply
JasperForex PRO P_Parker
a year ago
Good answer, touché! I will go short after a break below & close below (semi-aggressive on this one).
+2 Reply
P_Parker JasperForex
a year ago
So your Time has come -Triangle broke :-)
Good Luck Jasper
+1 Reply
JasperForex PRO P_Parker
a year ago
Cheers!
+1 Reply
Xaff
a year ago
Good analysis Jasper!

It is very educative, regardless how it plays out. so thanks for your time dedicated to the analysis.

Regards.
+1 Reply
JasperForex PRO Xaff
a year ago
Thanks for the kind words, I hope its of value to others.
+2 Reply
Xaff JasperForex
a year ago
I can guarantee that, at least, it is for me :)
+2 Reply
Thanks for the idea. And One Great Thread of comments.
+1 Reply
JasperForex PRO Technician
a year ago
Thank you, I appreciate it.
Reply
my 2 cents : I agree on the view if we break to the downside, but I´m already positioned long while above 1.553 on a daily close . The fact that cable wasn´t dragged by Oil drop is a strong fundamental argument to hold a bullish view on a oil relief rally. Technically , the breakout attemps are certainly compelling for an aggressive breakout to the upside
+1 Reply
JasperForex PRO Realisto_FX
a year ago
Thanks for your comment and for giving your view :)
Reply
tarmmyy PRO
a year ago
Very clear and concise analysis. I like it very much. I shall follow you.
+1 Reply
JasperForex PRO tarmmyy
a year ago
Thanks, the idea is still in play, am just waiting for a break to the downside.
Reply
jessetaylor
a year ago
Thanks for this one. Really insightful and clear explanation. Going short on the break as well.

Best,

Jesse
+1 Reply
JasperForex PRO jessetaylor
a year ago
Good luck, lets make some pips!
Reply
Luke00 PRO
a year ago
Would the TP2 key support be the support level, if the price breaks below the ascending triangle, or does this (lower dotted white) line only represent previous support levels?
+1 Reply
JasperForex PRO Luke00
a year ago
I plotted that line based on previous structure levels ("look left, structure leaves clues"). There are more levels along the way which I did not draw, to not clutter the chart (and each of these levels can cause a reaction in the price action like a slow down of momentum or a retracement), but the level at 1.518 would be where I would take profit on my last position.
Reply
Luke00 PRO JasperForex
a year ago
Thanks for clearing that up. Also, and slightly off topic, but are ascending triangle patterns always a short position indicator, and likewise are descending triangles always a long position indicator? Thanks.
+1 Reply
JasperForex PRO Luke00
a year ago
I personally see ascending triangles as bilateral patterns, meaning they can break to either side and I look for situational confluence to reach a directional bias and piece together a full trade setup. The pattern simply helps me isolate / highlight the main trend lines that contain the price action. Mind you, different traders will answer this question differently; it all depends on the context, strategy and trading plan.
Reply
Luke00 PRO
a year ago
What does pips mean?
+1 Reply
JasperForex PRO Luke00
a year ago
The smallest price change that a given exchange rate can make.
Reply
now
+1 Reply
JasperForex PRO both_left_hands
a year ago
I was already short :)
Reply
both_left_hands JasperForex
a year ago
maybe i'm too conservative
+1 Reply
JasperForex PRO both_left_hands
a year ago
Not necessarily. There is no "best way" to do this, there is always a trade off between risk and reward. But so far so good, I am 120 pips in at the moment and its still going.
Reply
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