@faithmight, Author at FaithMightFX

January 2, 2013

End of Year Breakout Fizzles In 2013

Not long after writing on the bearish outlook of the $GBPAUD, the pair staged a breakout above 1.5425 resistance:

Pops higher, however, should be met by sellers at or ahead of 1.5425 resistance level aiming to take price towards 1.50 in the coming weeks. Only a close above 1.55 changes the short term momentum to bullish.

It seemed as if the pair was turning bullish as it based at 1.50 even ahead of the 61.8% Fibonacci retracement level of the latest bullish wave. When a pair respects its Fibonacci levels on a correction lower, we expect that pair to make a new high higher than the previous high. The $GBPAUD failed to do so. Instead, the breakout fizzled at 1.5676 and has since turned lower.

Despite closing the year above 1.55, the $GBPAUD started off the 1st full day of 2013 trading dropping below that major 1.55 level. Looking to the left of the chart, we can see that previous breaks lower that closed the week below 1.55 saw momentum carry price lower.

Even on a smaller time frame, the daily chart, a candle close below 1.55 followed by a subsequent candle close below 1.55 saw a price drop as low as 1.5250.

So despite closing the year above 1.55, the $GBPAUD still looks bearish. It remains to be seen if this is the year the pair resumes its long term bear trend to new lows below 1.4700.

January 2, 2013January 13, 2013

Happy 2013

Sterling leaves 2012 with its larger trends still very much in play. Of course, the $GBPUSD is the outlier as the USD enters 2013 embroiled in political rubbish. However, all the pairs highlighted in November 2012 enter 2013 with the long term trends still largely in play.

GBPAUD False Break Short-lived

November 25, 2012

The GBPNZD PreMarket

In the forex markets, premarket is really only early Sunday morning. With charts frozen until the afternoon open, this can be the best time to find insights before charts start ticking again.

Because the $GBPNZD has not spent much time at these levels, it is taking some years for this currency pair to truly trend again.

Zoom in on the weekly chart and we can see that this pair has been trading rangebound between 1.98 and 1.9270. Last week’s price action tested the intermediate highs at 1.9625 and closed the week in the middle of the channel below the key psychological level at 1.95. The new week open should continue momentum towards the bottom of the channel at 1.9270. That is a key level to the downside for $GBPNZD short term as it continues to consolidate the larger bear trend.

November 25, 2012November 25, 2012

The GBPUSD PreMarket

In the forex markets, premarket is really only early Sunday morning. With charts frozen until the afternoon open, this can be the best time to find insights before charts start ticking again.

Cable closed the week with a Black Friday breakout above 1.6000 and managed to close well above that level. The $GBPUSD spent all last week being supported by the 50% Fibonacci level of the rally from the July lows to the September highs.

Now looking to the week ahead, I can see the $GBPUSD toy around 1.60 in the market open as buyers and sellers jockey for position. However, dips below should be met with bids, even as low as the 50% Fibonacci level of Friday’s breakout. If price gets back above or remains above 1.60 in the early week, it is highly likely that price will move towards the 1.6175 highs.

Despite the current bullish momentum, the $GBPUSD is still rangebound in the longer term. So don’t get caught up in this week’s bullish scenario. We still do not have true direction in this pair until it can close above 1.6300 or below 1.5230.

November 25, 2012November 25, 2012

The GBPAUD PreMarket

In the forex markets, premarket is really only early Sunday morning. With charts frozen until the afternoon open, this can be the best time to find insights before charts start ticking again.

The $GBPAUD is in a long term consolidation pattern with price currently hanging out in the middle of the weekly chart channel. So when the lows held at 1.5182 2 weeks ago, it is worthy to note that price still means to head to the bottom of the channel when price failed higher last week again at 1.5425.

Despite bearish momentum, price managed to close above 1.5300 support level and 50% Fibonacci level. So to start the week the possibility for spikes higher remains at the market open. Pops higher, however, should be met by sellers at or ahead of 1.5425 resistance level aiming to take price towards 1.50 in the coming weeks. Only a close above 1.55 changes the short term momentum to bullish.

November 25, 2012November 25, 2012

The EURGBP PreMarket

In the forex markets, premarket is really only early Sunday morning. With charts frozen until the afternoon open, this can be the best time to find insights before charts start ticking again.

I have been trading the $EURGBP very actively these past 2 weeks. The weekly chart continues to be constructive especially as price held support at 0.7950 to head higher back to 0.8110 on Friday.

Last week started at 0.8003:

Now we sit at 0.8090 to close that week. That close puts 0.81 at play to determine direction in price action this week. A dip to 0.8050-30 is still possible when markets open because of the close below 0.81 but should be short-lived. I expect price to see itself back above 0.8100 later in the Monday session. Only a close below 0.80 changes the bullish picture in play on the weekly and daily charts.

November 2, 2012

Sterling Digest, November 2 2012: NFP Friday

EURGBP Update: bears moving in (FaithMightFX)
Cable Setting Up A Bear Flag? (Forex Live)
Yen dangles near 4-month low, commodity currencies firm (Reuters)
Prospects for the UK economy (National Institue of Economic and Social Research) [PDF]
GBPJPY Update (50’s Blog)

November 1, 2012November 1, 2012

EURGBP Update: bears moving in

EURGBP 8 hour chart — $EURGBP price action today proving once again why I don’t like to buy euros.

While the $EURGBP daily chart started the week looking very constructive, price today collapsed ahead of the 50% Fibonacci level of last week’s price decline. The subsequent price drop found support at the 0.8000 level but bounced again back to 0.8035 intraday. Only a close above 0.8030 would make the bullish picture at the start of the week stand. However, as we head into the New York close, price is below the key 0.8030 level. Watch where price closes the day. If below 0.8030, any pop higher will be met by sellers. If above 0.8030, watch price to move back towards the highs at 0.8050-70. In any case, sellers seem to be lining up making $EURGBP look short term bearish on its failure to get to and break back above 0.8100.

Disclosure: No position

October 31, 2012

Sterling Digest, October 31 2012: mixed signals – banking vs. economy

Time Running Out for Greece (Currency Solutions)
CBI: UK Oct Retail Reported Sales Surge; Highest Since June (Forex Live)
BOE: Number Of Institutions Participating In FLS Rises To 30 (Forex Live)
U.K. Gilts Retain a Sheen In the Face of U.K. Growth (Wall Street Journal)
EU to UK: budget rebate “no longer warranted” (Financial Times)

October 30, 2012October 30, 2012

GBPCAD Above 1.60

I haven’t traded the $GBPCAD much this year. Despite some tremendous swings in price action, the 200-day simple moving average tells us that this pair has essentially been flat all year. And I typically stay away from trendless environments. But with price now above 1.60, the $GBPCAD has very specific behavior at this price level that I think provides opportunity.

While 1.60 is the major psychological level, it is 1.6050 that has been the level to determine future direction for this pair. We can see that when price closes the day above 1.6050, we typically see a 200-pip move higher in the $GBPCAD. Even in a trendless environment, those are price moves that swing traders can certainly take advantage of.

Disclosure: Long at 1.6029