The GBPUSD pair is currently exhibiting trading behavior within the range of 1.25300-1.27500, a pattern that aligns with the principles of the Wyckoff theory, a framework used to analyze market trends and anticipate future price movements. This current phase appears to reflect a redistribution phase within the Wyckoff model, characterized by a period of consolidation and distribution of assets among market participants.
In the context of Wyckoff theory, the completion of phases A and B signals the transition into phase C, which typically involves a climactic event that triggers a change in market sentiment. In this case, the recent entry into phase C coincided with a climax buy following the release of initial USA economic data on Friday, suggesting a potential shift in market dynamics.
Furthermore, technical analysis reveals the presence of the 61.8% Fibonacci retracement level around the 1.27 level, which has historically served as a significant resistance level. The convergence of this Fibonacci level with the current trading range adds another layer of significance to the price action, potentially reinforcing the distribution phase described by the Wyckoff theory.
Looking ahead, market participants are closely monitoring upcoming events such as Powell's testimony and the release of NFP data, both of which have the potential to influence market sentiment and trigger significant price movements. Additionally, the impending 2024 United States primary elections scheduled for March 5th are expected to introduce heightened volatility and uncertainty into the market environment.
Despite the short-term fluctuations and potential upside movements driven by these events, the overall market sentiment remains cautious, as evidenced by the recent closure of the monthly candle in the red. This bearish signal suggests a prevailing downward bias, with further downside potential in the near future.
Taking into account the broader market context and technical indicators, including the Wyckoff distribution phase, the 61.8% Fibonacci retracement level, and upcoming fundamental catalysts, we anticipate a downward movement towards the 1.18 level on the GBPUSD pair in the coming weeks.
It is important to note that this analysis is based on historical patterns and technical indicators and should not be construed as financial advice. Individual traders should conduct their own research and consider their risk tolerance before making any trading decisions.
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First shorts activated at 1.27200 (61.8% fibonnaci) If we will go higher towards 1.27600-1.27800 will be adding some more, if not staying with this trade. My stop for this trade is 1.29450 which is 225 pips My 1st target is 1.21 (620 pips) My 2nd target is 1.18 ( 920 pips) My 3rd target will be 1.10-1.12
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Another short positiion opened at 1.27892 (Climax buy happened) Stop loss for this position is at the same level as the other possition.
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We had a breakout of D box and pair didn't even tried to retest it. Trade is going in direction of our take profit. We are expecting soon to reach our TP 1
is such a wide stop for a major pair 225 pip realistic? even for institutional, sometimes wonder if they will hit and first close their stop profit position or BE rather than hang on to the distance of 1.29x. of course if usd turns around later, is going to be profitable. assuming you have live position that is throughout. what about who have shorted earlier, do you hit the sl first then reshort it again
To address your inquiry, this trade was initiated without leverage, and as indicated in my notes, the risk-to-reward ratio is maintained at a minimum of 1:3. With a risk of 225 pips, the trade's risk per trade is less than 2%, which is relatively conservative when considering percentages. If someone entered the trade earlier, their risk-to-reward ratio wouldn't align, potentially making the trade less efficient. I typically adhere to a minimum risk-to-reward ratio of 1:2.5 and utilize larger stop losses to avoid premature trade exits. It's important to note that this trade is not a day trade but rather a swing trade, and different rules apply to such trades. The analysis is conducted on the D1 chart but will be closely monitored on the weekly and monthly charts as well.