IvanLabrie
Long

GBPUSD: Potential trend reversal or at least major correction

FX:GBPUSD   British Pound/U.S. Dollar
693 43 10
2 years ago
Bullish sentiment has reached a dangerous extreme, momentum indicators are showing divergence when approaching the 5th point in this ascending wedge, which can potentially be a leading diagonal type Elliot Wave pattern.
Momentum divergence was present in the last push down, which is typical when approaching a bottom.
The Bank of England has kept a Hawkish tone recently, which changed the sentiment to bullish for the Pound.
Not so positive FOMC minutes helped seal the deal and made cable reach this sentiment extreme.
I expect a correction before further advance, which I don't discard.
I'd like to see a tradeable formation once this retracement is complete, to then look for long only trades.
a year ago
Trade closed: target reached
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good stuff
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I estimate that price can still travel up, and overshoot the trendline for 3-4 more sessions, before finally collapsing down.
Keep that in mind, having a super tight stop loss will get you stopped if short.
Going long is a bit hard to justify right now, considering the divergence and resistance above, but once price pulls back, it might be a great trade. I'll update with my own entry.
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danndc
2 years ago
do you think this pair could collapse and penetrate the barrier you drew? could it go to 1.50?
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IvanLabrie TOP danndc
2 years ago
Not likely, there's a very strong bullish sentiment surrounding GBP.
I'll wait to see what next week brings for a long.
If the retracement is deeper than what I expect, then we will see a new leg down, before a bigger reversal comes into play, but I'm more biased towards the first scenario outlined here:
snapshot

X marks the spot where I think price will slow down or stop moving down for a while.
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IvanLabrie TOP IvanLabrie
2 years ago
snapshot
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Hello Ivan. Interesting chart but very curious to know why you say 1.52255 can't be penetrated for the uptrend to be valid? Take a look at my attached chart. Its a 4-hour chart. Firstly 1.52292 - 1.51938 is a support level for the previously formed inverted H&S pattern. Price dropped here after first break out to retest and then hit the inv. H&S target. Now it formed a rising wedge pattern and broke out to do a retest again. Downside target goes back to 1.52123 (the same region of the previous support). Ideally, this level marks a potential zone to go long.

So i'm curious as to why you say uptrend is in threat if 1.52255 is breached as I find it to be a perfectly valid dip to test the support.
snapshot
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danndc justatrader
2 years ago
hi, what about if this area doesn't hold? i think that this gbp correction it's over after breaking a rising wedge that starts from 14995
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justatrader PRO danndc
2 years ago
Even the larger rising wedge (blue) which you pointed gives a correction down to the support level, although a little bit lower to 1.51817 - 1.51779. It still falls within the inverted H&S neckline levels. Which is why i'm very curious as to why the uptrend would be invalid if price dipped to this zone, which in my view is a logical dip.
snapshot
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danndc justatrader
2 years ago
what about if you make it start from the low shadow?(blue wedge)

in the wave count 15479 cloud have been the 5 point of the correction and if you make a longer view this could be the wave 4 of the downtrend.

why do you think it could not go even lower than 152 area?
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danndc danndc
2 years ago
snapshot
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IvanLabrie TOP justatrader
2 years ago
I have two possible scenarios outlined for cable.
If the leading diagonal is the first step in a bigger leg up, I think price must stay above that level. This if you watch for elliot waves and/or market profile or Tim West's time at mode.
Scenario 2 agrees with DanV's chart.
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IvanLabrie TOP IvanLabrie
2 years ago
One more thing. Your support level can work, but i think price will lose momentum and take much longer to go above the recent high if hit...or it can even sink again after a lower high rebound from there.
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danndc IvanLabrie
2 years ago
thanks for answering, where is the leading diagonal?
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IvanLabrie TOP justatrader
2 years ago
Those are not correctly labeled wedges per Elliot Wave Theory. Not saying mine are perfect, but IF this is indeed a leading diagonal wave one, then the high can't be breached if part of an impulse up.
If DanV is correct, then this is wave C of a correction before a final wave 5 down.
snapshot
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danndc IvanLabrie
2 years ago
what do you mean sorry? are you saying that 5479 was the top?
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IvanLabrie TOP danndc
2 years ago
For now it was. We will see general dollar strenght soon is my suspicion.
Ill update with trade setups tomorrow.
My goal is to time momentum with fundamental analysis after mapping a technical pattern.
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danndc IvanLabrie
2 years ago
so you are not taking out the possibility of retesting the lows, are you?
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IvanLabrie TOP danndc
2 years ago
Of course not. We have a lot of major news events on Monday and Tuesday that can strenghten or weaken the dollar.
This news induced event should led to swift and strong bullish momentum, so if GBP doesn't manage to conserve strenght it will crash dowb inpulsively once more before going up again.
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danndc IvanLabrie
2 years ago
so if us is strong enough this week you think that we will fall rapidly?
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IvanLabrie TOP danndc
2 years ago
The move that started after we broke from the wave 5 top, on the way down, will probably consist of 5 distinct waves down before slowing down and moving sideways an equal amount of time.

You can capitalize averaging down your cost/drawdown by going short around here. If I'm right, then you can make some money on the way down and reduce your loss or eliminate it completely.

I'll post what I think the wave count is tomorrow.
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jangseohee
2 years ago
a little more upside perhaps?
snapshot
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IvanLabrie TOP jangseohee
2 years ago
According to the gbp index chart I posted, there is a slight probability of some more bullishness in the near future, but right now it needs to correct down.
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justatrader PRO IvanLabrie
2 years ago
Yep... dip to 1.52 zone looks very much on the cards.
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IvanLabrie TOP justatrader
2 years ago
This should fall straight down:
snapshot
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danndc IvanLabrie
2 years ago
if this is the C wave, it should new lows right?
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IvanLabrie TOP danndc
2 years ago
C wave is more likely...but can also be wrong and just rebound from that low.
We will see soon enough. Big week ahead. Right now you can short and trail stops after crossing that target of mine.
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IvanLabrie TOP IvanLabrie
2 years ago
snapshot
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danndc IvanLabrie
2 years ago
don't you think it is going to visit 1.50 after all and such a awful data from UK?
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IvanLabrie TOP danndc
2 years ago
Did you short the top like me and DanV advised?
One step at a time...i want to see five waves down. I'm short from 1.539
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IvanLabrie TOP IvanLabrie
2 years ago
Probably time to scale in again, I'll wait for this 4h close:

snapshot
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danndc IvanLabrie
2 years ago
what do you mean? and what are you expecting from this?
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NickCoulby PRO jangseohee
2 years ago
Wow that has to be the most arbitrary support line I have ever seen.. congrats!
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jangseohee
2 years ago
@danndc
1st possible scenario
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danndc jangseohee
2 years ago
right from here or first up?
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jangseohee danndc
2 years ago
go up abit rejected by EMA and come down to find support
just my projection
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Probable outcome:
snapshot


I remain short until proven wrong. Recent wave 1-5 decline had the 1st wave low breached by a flat correction which I suspect is B of a zigzag correction down, out of the leading diagonal 1-5 wave 1, which has a terminal wedge as 5th.
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IvanLabrie TOP IvanLabrie
2 years ago
*as long as we don't reach 1.55239 today.
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IvanLabrie TOP IvanLabrie
2 years ago
snapshot
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IvanLabrie TOP IvanLabrie
2 years ago
Will open a second short after today's NY close.
Short term trade, should be quick and reach the target tomorrow.
Then I will try to get long after the Yellen speech if possible, depending on the outcome and wether my Elliott wave count is correct or not.
If not, we can expect price to dive past my support level in red, but it's less likely from a technical stand point.
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Time to place stop orders is near...
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Entry long today, tp half at recent high, ride the rest of the move with house money.
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IvanLabrie TOP IvanLabrie
2 years ago
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Max support has been reached...now what? Waiting for the NFP reaction to take any trades here.
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Considering everyone and their mother is bearish on cable right now...this wouldn't surprise me.
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