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 levels on chart. If you want to learn more about these methods, contact me privately.
PS: I'd reccomend using the weekly stop for all entries.
We can expect continued bearish pressure here, but not a good sell setup unless we get an overbought rally in the daily, ideally.
Potential catalyst for a move 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!
Let's watch tomorrow's bar, on close and then decide.
We can sell it again soon, once we get a time at mode signal again...not yet viable.
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.
Then by Nov 7 we can probably short under tomorrow's low.
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.
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....