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GBP/USD extending slide; 1.5260/70 support
By Jamie Coleman || March 17, 2010 at 15:37 GMT
|| 29 comments || Add comment
Cable continues to fall on profit-taking after its earlier spike to 1.5380. We’ve sded about a panny so far, touching minor Fibo support at 1.5285 (the 23.6 retracement of the 1.4980/1.5380 rally.
Congestion is eye on the hourly charts at the 1.5260/702 area; more stop-loss selling is expected should that area break.
Any cable bears around? I’m considering shorting this pair around these levels. I might wait another day to see if price does indeed fail here. Any views?
Michael, I think it is a good idea, although I would wait for the obvious trendline in the 5m chart to give way. Respect the rally meanwhile.
Yeah, I think waiting another day or so would be best. If i’m thinking straight, eur/usd and cable both should take a dive soon, freeing up usd/jpy. Sending my kiwi/yen trade on up. I want to be short cable, if this happens. I don’t think this kiwi trade, is going to be a monster, by any means.
Michael & Emilio, please be careful, as there is a serious Elliott 5-wave pattern on the current GBP/USD short-term charts. To wit, yesterday (March 16th), upwave 1 started at 1.49961, topping out at 1.52559. Then, downwave 2 came into play, bottoming at 1.52115 (March 17th), followed by the short queeze of wave 3 that roared off to 1.53733. This, in turn, led to a little profit-taking (and downwave 4, which reached its conclusion at 1.52754 about 3 hours ago). So, now we are in upwave 5 (the last way of this up-movement)…which, technically speaking, has to – at least – crest over the top of wave 3 (1.53733) in order to conclude this joy ride. PS: I am aware that I am picking hairs about where wave 5 crests (as a matter of fact, it just may have done so while I have been writing this note), but the GBP/USD signal lines on the 30-minute MACD and 15-minute charts haven’t turned negative yet, so perhaps my caution is warranted.
PPS You might get more shorting mileage out of your money by shorting the GBP/CAD, which looks like it is about to drop out of its 2-day, “A-B-C” correction wave, up-channel (with the rising bottom of that channel sitting at about 1.54481) and 60-minute MACD – on the same chart – is already perfectly awful (unless you want to go short, of course).
Hi Solange, what you describe is not a valid impulse under EWP. That is because what you call wave 3 is the shortest of the 5 if price moves a bit above the recent top. If it doesnt, it is still a very unsual shape for an impulse. There are other indicators, such as being able to channel this move (usually wave 3 pops out of the channel) and also that wave 1 is rarely bigger than a wave 3 (I doubt that its actually allowed under EW).
You know, these EW discussions always make me chuckle.
It’s almost as good as playing Mornington Crescent
well picked Solange sold on the break of the hrly 200 ema.. just watching the reaction here at minor trend support at 1.5449
I know Lilac, it tends to happen to people that have not bothered to check whether the metodology works (for them).
I have Prechter here on the bookshelf thumbing its nose at me
They are better than Mornington Crescent, which always seems to me the dullest part of the show. It’s the level of commitment that makes the difference…
What a bizarre scene.
Emilio – you appear to be an Elliott Wave specialist. Please tell me if the 2-day, 30-minute chart of the current AUD/USD is not (also) a concluded 5-wave up-movement (the top of which was just made at .92505) and we are now entering what is probably an A-B-C correction mode of existence (until Sydney wakes up and buys everything back that North America just sold, of course).
I’m sure you’re right, Sir Alex.
Anyone that has ever sat in a room with a couple of so-called EW experts will know that EW was thought up by a woman….doesnt matter how good you are at it.. ur never right.
I’ve looked at EW, but the fact that asking 5 EW folk the count results in 6 answers is a bit troubling. There is the New EW Rule that Hennessey is giving away, eliminating extensions, etc., but so far just looking at PA, fibos, trendlines and Bollinger Bands seems to work (with less work) for me.
Elliott Wave is pop psychology and about as useful and predictive as Marx’s paradigm. Prechter is always calling a top, and he’s usually wrong. At least fibo and classic TA are simple enough so that they are used. But the five wave theory is coincidentally interesting as it applies to the euro, which has just had the first (Greek) wave and has four more piglets to go. I do hope we save the best for last and that it ends with Berlusconi’s Italy…
Does anybody use Bollinger Bands? I’ve been having pretty good luck with them or is that it it’s just luck? 64% on my good trades I just need to cut the losers sooner.
Hey Annie, IMO, Bollinger Bands work well in range-bound markets because it shows you the moves that are two standard deviations above or below the mean. It doesn’t work as well in markets that are in distinct up or down trends. So, whereas the S&P may be range-bound for 2010, for example, a market in a strong uptrend, like a biotech company that has just been approved to market a blockbuster drug, can go on a run and take those bands up with it- see hgsi for the past year.
Yes it is sweet when they run up those bands Thanks JR
Yep I use them, Annie.
5, 30 min and 4 hourly charts.
Then I’m in good company Thanks Lilac
EW works wonders in technical patterns. Like in triangles for instance. See the euro/pound symmetrical triangle that I pointed out last week.
Gimmie a donkey any day of the week ….
I was going to mention that earlier, but I didn’t want to raise the tone
You sure you weren’t thinking about an ass?
http://s798.photobucket.com/albums/yy266/bigmillers/?action=view¤t=eurgbp.jpg
That’s what blokes do Blackers