Did the market take a "pound" of flesh from traders, following a near 700 pip parabolic move? Traders often think these moves are ever-green; but there are a few take aways from the three-day wash out:
The vast majority of forex traders (or retail in my opinion) are technical traders. They depend solely on price movement and indicators to try and predict where a particular pair may go. And that's fine. It's like being a hunter-gatherer picking up berries and finding scraps.
However, to truly make an impact and become an apex predator, traders need to combine a series of disciplines in order to adapt to current markets. Because, let's face it, forex is trading Darwinism.
Technicals are great, but traders must also include fundamentals (both related to the pair and a broader sense). They must be able to relate the performance of other asset classes into forex (i.e. yen with NZD or AUD; crude with CAD or NOK , etc.). Lastly, picture of overall market sentiment must be formed.
The reason I bring this up is because I noticed a lot of winning on social media and other forums, primarily those who piggy-backed ideas from other traders. Not that the ideas were bad or came from unscrupulous sources, but whiners who put little in get little out.
I have been lucky enough to develop my mind into a tool that can take in information from various sources. For instance, I was able to take in the dollar and yen , which gave me leads to NZDUSD and GBPUSD , fundamentals, combined it with current market sentiment and developed a picture of GBPNZD from it.
Interesting enough, my GBPNZD call was at the near-term top. All I'm saying is forex - markets in general - are dynamic, so your analysis has to be as well.
Establish traders who put their work out for everyone to see do it as a means to communicate with other traders and test their ideas. To those simply looking for handouts won't get any sympathy.
In regards to GBPUSD , the pull back was well-over do, but the resurgence of the dollar could cause an issue with upward momentum.
The general consensus is that the BoE will be the first to hike interest rates. I suppose history repeats itself.
When the Fed was still undergoing 3, England was expanding economically and the data was quite good. Traders wanted a rate hike and pushed the GBPUSD to multiyear highs on an event that had yet to happen. The recent move in the dollar was nothing compared to Sterling.
However, BoE Mark Carney failed to hike rates because he was too scared that the fake recovery would crumble. Needless to say, the economic data grew weak and the pound jumped off a cliff .
Then it was the Fed's turn, and we been witnessing that debacle every FOMC Wednesday for nearly a year - I digress.
Tuesday's CBI Industrial Orders came in at a dismal -7 opposed to economists' hopes of 1. This was worse than last months -5. BBA mortgage approvals were less than expected, but were slightly higher than the previous print.
Price action could find support at 1.5658 with upside potential back up to 1.5811. However, a close below the 4H 50 could cause further selling to 1.5612 with additional support of the 200-daily .
Price action is still relatively , but expect the pair to further breakdown if there is a DMI convergence.