IvanLabrie
Short

GBPUSD: Fundamentally weak, structural short

FX:GBPUSD   British Pound/U.S. Dollar
We had covered our previous short for great profits last Friday, and we're now looking to rejoin this downtrend.
It's safe to short any rally, or to short if daily prices go to 1.24795 or higher.
To make sure we're in, we can divide our entry in 2 or 3 parts, and just take a smaller entry at market open, splitting risk equally between these positions*. It appears like we can expect the Pound to selloff further, so, any sign of strength is a short for us, given the pending 'time at mode' price target on chart.

I added 4 predictions, based on the key levels and speed lines, as well as the price action. If we gap down, we could expect the red path, if no gap, the black one. If we gap up, the green path wouldn't suprise me. I'd have to see what the positioning looks like for retail traders after this shock. I'd guess all longs have been stopped out by now. Before this, we had like 85% longs according to FXCM's SSI             tool. A sideways path would frustrate everyone, until they'd start looking for longs again, and then, we get the big drop again.
This is just a guess, but, you can estimate the reaction when we approach the speed lines and support and resistance levels on chart. If you want to learn more about these methods, contact me privately.

Good luck,

Ivan.

PS: I'd reccomend using the weekly stop for all entries.
Comment: (Sidenote: I'd prefer to either use wider stops, and sell gradually on each rally here. It's tempting to jump in the action with a tight stop right away but that probably means that's not the trade to take right now, since, who's there left to sell?)
Comment: Gap down.
Comment: Looks like the black guess is en route.
Comment: Prices below the flash crash key level.
We can expect continued bearish pressure here, but not a good sell setup unless we get an overbought rally in the daily, ideally.
snapshot
Comment: http://www.bloomberg.com/news/articles/2016-10-16/may-urged-to-reveal-brexit-strategy-as-lawmakers-push-for-vote

Potential catalyst for a move again.
Comment: Turned out the Brexit vote has to be ratified before the article 50 is invoked, this gives the Pound a boost. If we get a new weekly high, we can confidently short again.
For now, we have to watch, price is right at the mid point of the flash crash range, it could top here, or it could close higher and go and make a new weekly high, luring a lot more bulls in before dropping again. Stand aside and watch.
If we get overbought CCI readings in the daily, even better!
Comment: https://www.rte.ie/news/2016/1018/825051-brexit/
Comment: Potentially, this rally will top at 1.23444, but it could extend more.
Let's watch tomorrow's bar, on close and then decide.
Comment: Looks like it's between the black and red guess pathways.
We can sell it again soon, once we get a time at mode signal again...not yet viable.
Comment:
snapshot
Trade active: Thanks Carney, Draghi, let's short:

snapshot
Comment:
snapshot


This is evolving into a higher timeframe setup, possibly a giant weekly short again. We'll have to wait for a weekly trigger, but don't follow the overexcited bulls, until further evidence this is a low risk short waiting to materialize...It'll just chop.
Note that it NEVER, ever went above the 'flash crash' key level I labeled there. When you see a daily low, on close, sitting higher than that level, worry about shorts.

For now, wait, and the short signal will trigger.
Notice the speed lines, we broke through the maximum time it could remain sideways for the daily trend to pan out. Please, don't long GBP pairs, it'll be disappointing. Probably wise to be flat GBP overall, the market is afraid of touching it, and someone is building shorts in the background.
Comment: Wait for tomorrow's inflation news. Data should give us more information on this pair.
Comment: Entering the interesting short zone, need to wait for short term momentum chasers, and traders who got excited with the inflation news to be all in.
Then by Nov 7 we can probably short under tomorrow's low.
snapshot
Comment: We topped at the red dashed line.
Comment: Downtrend speedline held, this is good for shorts.
Just like they did stop running on GBP for longs... everyone gets short they will do stop running on the long side!!!! Data out of GBP is okay to good... With EUR/GBP going up this will make GBP economy even better since EUR is a larger part of GBP economy! Shorting GBP at this time one might get shocked with BOE upping rates... One needs GBP to be put in a box... Need oil prices going down so north sea and UK onshore will hurt... need exchange rates for EUR/GBP to drop big time to put a hurt on GBP economy. BREXIT to restrict UK finance... Then its time to sell GBP big time... now is not the time to be selling GBP. In my opinion....
Reply
IvanLabrie PRO RobbyWestHouston
That's a possible read, but the concerns about hard Brexit are still in the air.
I do think price will frustrate everyone first(thus go sideways to up), but, we can sell rallies for sure.
Reply
For me to get on the sell side I need something to be a driver of GBP togo down. So far their is nothing and GBP is showing signs of life. For me I can not take short positions until I get something to cause GBP to stumble. Once I see GBP having something that will hold it back... Oh YEA I will be SHORT... but right now the sprinter is out in front and looking like it might win the race... I need something to drive economy data down...like cycle of oil and netgas going down...that cycle is up...going to test the upper band of 60 and netgas is going up to test its upper band... EURO to be very cheap and Pound to be very expensive costing the British a lot and that is the reverse right now... The British are getting a break with buying stuff out of Europe at under market value. That gives British people extra money to allow them to buy more!!! For me the direction has to change where GBP is going to get hurt all I am seeing is positives for GBP....
Reply
IvanLabrie PRO RobbyWestHouston
Important to track sentiment, technicals, and how they align with fundamentals, along with macro.
It would appear logical, for UK to be in better shape than Europe in the long run, from these factors you mention, but other external factors might hamper the currency's advance. Specially against the dollar.
I'm not looking to trade it without leverage, so I have to follow shorter term catalysts and technicals to ride each move here. Relative strength showed weakness in the Pound, and overconfident bulls (85% of traders long before this drop) told me the trade to be on was the short before.
Once we hit the target on chart, or if we fail to hit it in time, and/or we breach the resistances above, we could see it rally back towards the mid point of the Brexit range with ease, but that is wild speculation for now.
Reply
Completely agree with you... My tech stuff I use is in oversold area so tech it's not a sell for me. I know currently their is a lot of people on the sell side... So I know I do not want to be on the sell side right now... What I am hopping for is something to come out to cause GBP to stumble and the tech to get into a neutral area or even a over bought area. Then I will be all over GBP SHORT.
85% was the reason why they ran the stops. Too many people were position for GBP doing good. My opinion you are going to have the same setup with even higher longs because the driving factors are some of the things I pointed out above and they are not changing they will only accelerate the lower GBP goes... that will just make 95% longs... then we will get more stop running to flush out the longs... then you will have longs enter with out stops so no stop running can happen then you will get even bigger moves to flush out account...
So I want to step back and see what develops. Longs are not safe and short are not safe either until you have a one sided market like last week. Even then you haft to be careful... I want to look at other pairs like JPY or EUR or CAD. Leave GBP alone for now. How I am going to play it...for the next few weeks to end of year. Just me....
+1 Reply
IvanLabrie PRO RobbyWestHouston
Yes, that is a good strategy for it. If I were to be on the wrong side, my trade would be down by 4%, still manageable, but nasty.
I'm playing it with wide stops and smaller positions than most folks, for that reason. Others simply blew their accounts.
Cheers mate ;)
Reply
Yep! A lot of people lost their accounts. I also use good money management too. As Rate of Change becomes bigger, my position sides become smaller. How I do it. Everyone has their own ways of doing money management. Be safe mate! Do not get stop run man!!!
+1 Reply
Ideas Scripts Chart
United States
United Kingdom
India
España
France
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Forex Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Account and Billing Sign Out