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EURBGBP Bears Might Pave way For The Bulls

There is a major support level at 0.86375 which the price of $EURGBP has maintained in the last few years. Today, a dip in price has resulted, thereby GBP has gained about 350pips in 2019. After this dip, a trace of reversal has begun. In the past one and half years, price of $EURGBP has been between 350pips indicating low volatility.

The RSI has indicated an oversold position giving rise to a reversal in the price of $EURGBP. Despite today’s drop in price, there are signals that price will touch the resistance level at 0.90496 in next few weeks. Price of $EURGBP is currently around the support level again. Just recently, price touched this support level at 0.86324 in the last trading week in January. Ichimoku shows the price is in a downward direction. If price of $EURGBP touches the middle line of the Bollinger bands, price might continue the upward movement.

ON THE AIR with F.A.C.E.

For our first sterling chat of the year, Dale and I got right into my thoughts on Brexit given the upcoming vote in Parliament next week. Other highlights include:

  • What to do with those flash crash wicks?
  • USD weakness persisting but not gaining
  • Yen strength
  • Commodity currencies vs. GBP

Enjoy!

Mentioned: My 2019 Outlook (FaithMightFX)

My 2019 Outlook

Despite today’s New Year’s Eve rally, sterling has closed 2018 at some of the lowest levels seen since 1985. That’s not insignificant. And given that we still have Brexit drama, the U.S. government shutdown, crashing equity markets and tightening monetary policy even if through unconventional means, 2019 is not shaping up to be a bullish year for sterling.

GBPUSD DAILY CHART

PREDICTION: The $GBPUSD will continue to rally to the 50% Fibonacci retracement level pictured above at 1.2889. Because the markets like to be cruel, I can see it moving even higher to the 61.8% Fibonacci level. At that level, so close to the major psychological level at 1.3000, bears start to turn bullish and major stops get tested. Just when it seems like sterling will really make a bullish reversal, it will plummet to make new lows at 1.2250. Later in the first quarter as the Brexit deadline approaches, the 2016 Brexit referendum lows at 1.1950 (depending on your broker) will be probed. The market’s reaction to the Brexit deal that does finally materialize will determine where we go from there.

The euro celebrates 20 years this year! And its 20th birthday may be a good year for the euro, particularly against this GBP weakness. But the $EURGBP remains fairly rangebound to start the  new year. In fact, it has been rangebound since late 2017 after reaching new highs at 0.9306. However, it is a bullish range as this sideways action for the past 2 years has never managed to move low enough into the Fibonacci retracement levels on the weekly chart.

EURGBP WEEKLY CHART

PREDICTION: The $EURGBP continues to move higher. But it will be a grind and stair step higher as the markets contend with European politics in France, Italy and Great Britain. When the market finally resolves this 2-year long consolidation period, the $EURGBP will reach and break above the 0.9306 highs set back in 2017.

Equities rocked investors in 2018 when it did not deliver the Santa Claus rally that investors have come to rely on for the past 8 years. Instead, we were greeted with the worst Christmas stock market when the S&P closed down 2.71% on Christmas Eve falling to 2346. It was the worst Christmas Eve ever since 1985 when it fell 0.69%.

The 2400 level is a huge level in the S&P 500 ($SPX). This level marks the 2017 highs where price stalled, consolidated for a few months, and then barreled through that resistance to then new all-time highs. Those December lows mark a level of real support that I honestly have had my eye on since 2017. At that time, I expected a correction in price lower. Rather, it was a correction through time as bulls continued to buy the dips. This year, 2019, however, is a very different market.

S&P 500 DAILY CHART

PREDICTION: It seems any corrective bounce higher will remain below the lows at 2600. Above the 2600 level, equities may be ready to start a new bull market. But if it can’t hold above that level, I would look for $SPX to make new lows below the 2400 level. A break below the 2346 low sees price move to the 2132 support level.

A discussion on stocks is just not complete without a mention of bonds. After peaking in 2016, $TLT plummeted just 2 months later. The $TLT was in a free fall right to the 116 support level where it consolidated before moving lower. Many cried that bonds were in a bear market and they would be right, looking on short to midterm timeframes. But on the monthly chart, $TLT was still in a correction (albeit a very deep correction). As such, the 2018 lows were very important. They marked the 50% Fibonacci retracement level on the monthly chart. It would have sparked mad capitulation had that level been breached.

TLT MONTHLY CHART

PREDICTION: Now that price has moved back above the 116 support-turned-resistance level, $TLT looks well-supported to move much higher from current levels. I like a return to 130 in $TLT. A move above that psychological level clears the way to 132.25 where the market will have to make a decision. Depending on how investors are feeling about risk, price would need to hold above 132.25 for the bull move to continue higher and challenge the all-time highs at 140.13.

2018 was a year full of ups and downs. Nicely, most of those ups happened in my career. The downs last year really did make me stronger and propelled me in new directions that should be very good for the company and my career in 2019. Cheers to the new year! ?

Source: @cubewealth

ON THE AIR with F.A.C.E.

Last week, I had the pleasure to be back on the air with Dale Pinkert and the Forex Analytix Community Experience (F.A.C.E.) audience. We talked all things sterling as we always do. But I also spoke on persistence and patience in trading (especially in this market environment) as well as my thoughts on equity markets as we head into the end of the year.

Check out the full interview below. Enjoy!

ON THE AIR with F.A.C.E.

It’s always a treat joining Dale Pinkert live in the Forex Analytix Community Experience. This is the premier trading room on the internets right now. So it is honor to speak to this audience. To hear, today, how much value I bring to them is humbling. It makes my day to help people in their journey to successfully navigating these markets:

Take a listen below to our masterclass lesson in the GBP in real time after 4 straight months of decline against the USD and new lows versus the JPY. What’s in store for the rest of 2018?

ON THE AIR with F.A.C.E.

I was back on F.A.C.E. early this month on July 5th to chat about the summer trends in the major GBP currency pairs. Since I didn’t post the video here on the blog at that time, I thought it would be an interesting and fun exercise to backtest some of the forecasts I made with Dale at that time.

I spoke about the current downtrend in the $GBPUSD which needed to move higher and close above 1.3350 to reverse the sentiment. Well, we got to 1.3350 last week but sellers came in swift to push the $GBPUSD to new 2018 lows at 1.2956.

At the top of the month, the $EURGBP, after being stuck in a tight range, had just broke above the key 0.8850 resistance level. I spoke about the potential for the $EURGBP to establish a new range between 0.8800 and 0.8950 depending on the market reaction to Brexit news and non-farm payrolls. This week, the $EURGBP reached 0.8950.

The $GBPJPY and the $GBPNZD moved exactly as expected off their failed lows and highs, respectively. The $GBPJPY did break above the major 148 resistance level to new highs last week. The $GBPNZD did break lower too but it moved 300 pips lower I than expected.

So all in all, not bad. Three out of 4 calls is actually quite excellent in this business.
 

 

 


There are ebbs and flows to every market. Trade what you see. Learn how. Or simply invest with a pro. [sponsored]

ON THE AIR with F.A.C.E.

This week, Wednesday, I had the pleasure to be back on the air with Dale Pinkert of Forex Analytix Community Experience. If you didn’t catch it live, you missed the opportunities I pointed out in the $GBPAUD and $GBPJPY.

Weakness has seized the GBP this morning after the recent UK GDP miss on top of the weakness in retail sales and inflation. There is no way the Bank of England raises rates in May or June. And that shift in sentiment now threatens to completely undo the recent GBP rally. See my thoughts ahead of this selloff.

There are ebbs and flows to every market. Trade what you see. Learn how. Invest with a pro. [sponsored]

ON THE AIR with F.A.C.E.

Early this week, I was back on the air with Dale Pinkert. In front of hundreds of live traders in the audience, I walked through my rationale for guppy, a bullish cable, a bearish euro and a continued dumping of the Canadian dollar:

 

There are ebbs and flows to every market. Trade what you see. Invest with a pro. [sponsored]

ON THE AIR with F.A.C.E.

Happy new year to the Forex Analytix team! This team of traders are experts and veterans in forex trading. Many of them I have been following for many years on Twitter (@nictrades, @spz_trader, @forexstophunter) and even before there was a Twitter (@pipczar). But the F.A.C.E. community is also full of many expert traders as well as new traders. So when I am asked to come on the show and discuss my views of the market, I consider it quite an honor. The respect, questions and great feedback I get from this team and audience makes it such pleasure to return.

Dale has such great timing as I made my first 2018 appearance on F.A.C.E. right before the Great British pound went on this monster breakout today. I revealed a few secrets that even Dale admitted he hadn’t heard from me before on his shows. The specific levels have been left far behind after Wednesday’s price action but the trading principles I discuss can be applied even now. Enjoy the show!

ON AIR with F.A.C.E

I spend every Sunday with students looking at markets for the upcoming trading week. So I was happy to share this week’s insights with Dale Pinkert this morning of the Forex Analytix Community Experience (F.A.CE.). While F.A.C.E. may be a new community, Dale certainly is not. He is an expert trader who has great experience interviewing the best personalities and experts in the business. So it is always an honor to be asked to discuss my views on markets. The nugget I dropped today that Dale really liked:

Correlations are shot. There are no correlations right now in the market.

What do I mean? Watch my interview and market review to find out.