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max_andronichuk
Jul 21, 2014 2:56 PM

USD/GBP - Short Setup Developing - 1.70 Sept Puts  Short

British Pound/U.S. DollarFXCM

Description

Idea is simple:

1. Wait for market to recover to 1.7116 - 23
2. Buy September Put Options with a strike of 1.70 (personal preference)
3. Wait

Rules:
1. If market proceeds to make a new high above the 1.7190 High on the 15th of July.... Close position.

Why am I using options?:
1. Risk is fixed.
2. Greater leverage because we are expecting a SHARP selloff from this set up, not simply a drift.
Comments
max_andronichuk
Correction to this:

It looks like the 5 waves down isn't completed, and what we are seeing here may be forming a triangle for a wave 4 (bear pennant) with a wave 5 to come.
Where the blue labels show waves iii and iv... the blue wave iv should end where I have put wave iv (red).... with blue wave v where I have put v (red) to complete the RED wave iii.

Hope that makes sense :S
chessnut
Yeah well it sure looks impulsive. from an an EW perspective I dont see the a - b ((ii)) - i count, wave c should normally pass the extreme of wave b and also should be impulsive, rather hard rules. Hard to see another bearish impulsive count however. Wave C is always impulsive so looking for a weak five wave climb to terminate in that area, as good a trade opportunity as any. I would only look to short this at low upside momentum at any given point personally, that A wave could be a primary off that juncture, given the set up is not 100% clear to me. Im trading short XAUUSD atm, seems clear.
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