Best Thread BBmac's Gbpusd thread

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market commentary

This 12noon Boe/Mpc data release better not be a let down after the London session so far in this pairing, lol!

0920 GMT [Dow Jones] GBP/USD printed a fresh 2009 high of 1.7044 Wednesday; however, Barclays Capital says a small divergence warning on the intraday charts is the first sign, since Monday's break higher, of a tired uptrend. The bank pegs near-term support at 1.6880 and says any break here will likely trigger some profit taking. However, while support at 1.6740 holds, the bullish potential for a move toward 1.7350 is intact. GBP/USD now at 1.6986. (GST)
 
15min triangle narrows

Will it break before 12noon data??

G/L

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market commentary

BOE: The markets are split, although most economists are paring
back expectations that the BoE will extend its quantitative easing
programme at Today's MPC announcement at 1100GMT. The move comes in the
wake of recent better than expected UK services and manufacturing PMI
and CIPS construction data this week. Most traders now believe that the
Bank has now completed its Stg125.0bln worth of asset purchases and if
there is any extension of the remaining Stg25.0bln, this is likely to be
private-sector assets rather than Gilts. Whilst the SONIA market is
pretty much pricing very little chance of a rate move at today's MPC
meeting, the curve is pricing in around 125bps worth of rate hikes in
the next 12-months. The first 25bps rate hike is fully priced in by
January 2010. The markets will also be closely eyeing the accompanying
statement from the MPC, which will give early indication of BoE thoughts
on the Quarterly Inflation Report and the risk is that the Bank may
sound more optimistic on growth than it had been in the May QIR.
 
Post data-market reaction

Well can't say you weren't warned-lol.. 2 of the 3 likely scenarios re Boe/mpc's QE programme were a sell...and markets hate surprises with an even bigger further QE of £50bn announced, causing the downside reaction in this pairing..

LONDON (Dow Jones)--The Bank of England's Monetary Policy Committee Thursday voted to boost its bond-buying program by GBP50 billion to GBP175 billion, suggesting it still harbors concerns about the sustainability of recent signs of economic improvement.
But it kept its main interest rate on hold at a record low of 0.5%.
All eyes will now turn to the bank's quarterly Inflation Report and press conference Wednesday, when it will unveil its latest forecasts for inflation and output, for a clearer indication of the policy outlook.
Economists had been highly divided over the likely outcome of the meeting. Sluggish M4 money supply growth and a larger than expected contraction in U.K. output in the second quarter had persuaded a majority of economists polled by Dow Jones Newswires that the MPC would extend its quantitative easing program, under which it has already bought GBP125 billion of mostly government bonds.
But a large minority had tipped the MPC's nine members to stay on hold Thursday, with many of those saying that more action at a later date remained a distinct possibility. Figures Wednesday supported that view, showing that the dominant U.K. services sector expanded for a second straight month in July.
All those polled thought the BOE would keep its benchmark interest rate at the current record low of 0.5%.
-By Natasha Brereton, Dow Jones Newswires; +44 20 7842 9254; [email protected]


Look at where the post data support has been found, good confluence, a previous 1hr swing lo zone, 2 x fibs, dly S2 calculated pivot area and ascending support trend line on 4hr joining the 6336 and 6466 lows, and 150% fib ext of y/day's lo-hi. Nice 1min play off that support for a handful of pips, but market may continue to be bearish from here in light of data

G/L

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4hr ascending support t/line

Here is the 4hr ascending potential support trend line

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How did 1hr and 15miun triangles fare? discussed in posts 58,59 and 63

Well the 15min triangle broke to the downside ahead of the data but right into potential support so no bearish thrust candle formed, and the 1hr triangle has obviously broken to the downside too but like the 15min candle that broke it's respective triangle has not closed as a bearish thrust candle. Best play now might be to see price pullback to potential sbr on 1hr.

Done for today here.

G/L

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Hi bbmac,

Second that, a great thread. Will be suscribed also. Using your trading methods managed a lovely Rev B at 12:13 after the BOE news for a nice +11pips. Then 13:43 Rev A extreme with supporting 5m Re-entry at 60m test of 1.6911 SBR level. Nice +17pips taken.
 
I placed a sell order below the consolidation zone at 1.6960 and just took profit at +200pips, that'll do then.
 
more selling pressure in post Boe period

Hi glyder/globaljobberthx for comments, well done to globaljobber re those trades, and to virtuos0 too

Globaljobber: That 2nd trade you were talking about there the 1343 Rev Extr with supporting 5min Re-entry 2 was a great set-up, as price pulled back after the data from the potential support discussed in post #65 to a pullback high of 6909 at the previous 1hr swing lo=previous support=potential sbr zone (shown as point a on 1hr chart below) with the then 38.2% fib of the then total 7077 to the pullback low of 6822 fall. The repeating hidden divergence based 5min Re-entry (to next t/f trend after a pullback) set-up is shown below;

(5min Re-entry 2)
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As suspected the pairing has sold to a new LL following the pullback as the market continues to digest the Boe announcement. Price is finding support at the base of previous 1hr swing hi=prev res=potential rbs zone with the 50% fib of the 6471-7044 move, shown as point b on 1hr chart below.

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The 1213pm set-up you mention was as you know supported by a great 5min Reversal Extreme set-up to go long there at that potential support cluster duscussed in post #65. Regular divergence on 1 t/f with oscillator extremes on the higher t/f or vice versa at potential supp/res can be a hi-probability trading opportunity, even against trend.

(Reversal B @ 1213pm -1min)
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(Supporting 5min Reversal Extreme)
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G/L
 
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Fri 7th Aug 09...market commentary

Thx for your comments Rocket.

RBS results wieghing on cable?

0717 GMT [Dow Jones] The BOE's decision to extend QE Thursday caught UK markets on the hop, halted sterling's rally in its tracks and triggered a run on the pound. That helped the dollar recover pretty much across the board and with stocks showing no signs of life the FX market decided to take some profit and then stand aside ahead of the all consuming U.S. payrolls report due Friday. Europe picks up the major currency pairs within a couple of ticks of where it left them late Thursday, European stock bourses are nudging toward 1% losses so its unlikely risk appetite will pick up before NFP's hit the wires at 1230 GMT. (GST)

Contact us in London. +44-20-7842-9464
[email protected]
 
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1hr chart update

The 1hr screenshot below is the updated current position as I see it in respect of previous obvious near-term imbalances of supp/dem (swing hi's) and dem/supp (swing lo's) and unbreeched fibs/trend lines on this t/f.

The unbreeched fibs are drawn from 6471 to 7044 and the blue dotted are from 7044-current low. Av Dly pip range moe: 215, today so far: 90

I will post the current 4hr chart too presently.

G/L


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hidden divergence on 4hr developing?

Just before I post the 4hr chart in respect of potential supp/res on tbhat t/f, the 4hr chart below shows the hidden divergence atm at the previous daily swing hi=prev res=potential rbs zone. This pattern of hidden divergence could still be developing, ie price could go lower and with U.s NFP due later anything is possible.

G/L

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4hr chart update

The 4hr screenshot below is the updated current position as I see it in respect of previous obvious near-term imbalances of supp/dem (swing hi's) and dem/supp (swing lo's) and unbreeched fibs/trend lines on this t/f.

The unbreeched fibs are drawn from 5980, 6031 and 6337 to 7044 Hi.

Price has breeched it's steepest ascending support trend line to the downside and re-entered the previous rising channel top (red dotted line) that was breeched to the upside and currently sits in a previous swing hi=previous res=potential rbs zone on this and the Daily t/f.

G/L

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nfp

Source: The NFP And The Markets - FX Instructor Forex Blog

The Non-Farm Payroll and Unemployment Reports are considered by most economists to be about the most important economic indicators, and certainly, their immediate aftermath creates a high level of volatility. However, as any trader will tell you, a consistent trend is much easier to profit from than immediate short term movements, so let’s look at the numbers and see if they truly are a help in this regard. The answer will probably surprise you.

As currency traders we of course look at the dollar’s movements but remember, the S&P 500 has a huge amount of influence over where the dollar is going. Actually, the dollar’s relationship with equities is rather a chicken and egg affair-either one can definitely drive the other given the right set of circumstances. For example, the stock market crash which ensued after the Lehman bust last September certainly helped drive the dollar far higher against the higher-yielding currencies while Bernanke’s infamous “electronic printing” comments during his March 15 60 Minutes interview helped push it in the opposite direction and spark a rally in equity markets.

What it really comes down to is investor’s appetite-or lack thereof-for risk. When the investors are risk-averse they move into the dollar and Treasuries as they move away from stocks and commodities while the acceptance of risk has the exact opposite effect. So the real question we need to answer is what if any effect the NFP has on investor’s risk tolerance.

First, the unemployment rate has followed a consistent pattern; it’s worsened each month at a level about as expected. The only exception has been in July when the 0.1 percentage point increase was less than expected. That’s significant because of the way unemployment is measured; workers who are not actively looking for work are not counted in the headline unemployment rate but as they re-enter the job market, they are.

Over January and February, the markets were in risk-averse mode; the S&P 500 lost 9.03% and 10.69% while the dollar index gained 5.46% and 2.53%. The NFP, while certainly bad, was basically about as expected in both reports. In March, the amount of jobs lost continued to worsen but the number was better than what the market was looking for. The S&P gained 9.36% while the dollar index fell 2.92%. The April loss of jobs worsened about as expected as the S&P gained 10.52% and the dollar index fell 0.94%. The tide turned in May when the loss of jobs declined for the first time, beating market expectations. The S&P gained 5.21% while DXY fell 6.22%. The June loss of jobs was far better than expected while the S&P was basically flat and the dollar gained 0.84%. Finally, in July the job loss was far worse than the market was looking for, but he S&P still managed to gain a very healthy7.22% while the dollar fell 2.27%.

The only conclusion that I can draw from the numbers is that the NFP itself is actually a poor predictor for market risk tolerance over the subsequent month, with the proviso that the market is betting that job losses peaked in April at -663k. It seems to be that the unemployment rate carries more weight with investors, especially given what happened in July when stocks rose when the loss of jobs accelerated as the unemployment rate grew less than expected.

Meanwhile, the latest data on unemployment claims shows a decidedly mixed picture when you look a bit deeper into the data. The number of people continuing to claim benefits rose by 69,000 to 6.31M while the 4-week moving average decreased by 148,500 to 6.427M. Economists prefer to use the 4 week averages in this series because they smooth the data however, the number of workers continuing to claim benefits will fall as they run out unemployment insurance, which is happening now
 
market commentary

Hope we are not in for a repeat of yesterday pre Boe morning !

0809 GMT [Dow Jones] It looks like the forex market has decided to shut-up shop ahead of the July U.S. non-farm payrolls report. The dollar is unchanged against the euro and JPY from late levels seen Thursday, although it has made small gains against sterling with the latter weighed by disappointing 2Q results from RBS and Thursday's BOE decision to extend QE. The pound is down at $1.6738, the euro is unchanged at 1.4365, and the dollar fetches Y95.40. (GST)

Contact us in London. +44-20-7842-9464
[email protected]
 
market commentary

FXstreet.com (Barcelona) - The Pound is trading at levels right above 1.6800 on early European session, after dropping yesterday from 1.7000, and Karen Jones, currency strategist at Commerzbank, expect further consolidation at current levels.

According to Jones, potential dips should find support at 1.6745/6560: the market has rallied sharply higher recently and we would expect it to attempt to consolidate some of its gains. Dips lower should find good interim support at 1.6745/1.6560 (the recent high) and be contained by 1.6238/16375 (55 day ma and uptrend)."

On the medium term, the Pound remains aimed towards 1.7000, according to Jones: " Targets remain 1.7050 (November 2005 low) and then 1.7330 (the 50% of the entire sell off from the 2.1160 peak). Today’s trade: Longs reinstated on dips to 1.6775/40, add to longs on a further erosion to 1.6670 and place stops 1.6560. Cover 1.7050


By the way, Wayne McDonnel is hosting his usual live NFP trading session over @ fxstreet link here: Live - FXstreet.com which can ge good fun.... the host is a lively guy and there is a lot of u.s style whooping and wailing and self congtatulatory back slapping but in amongst all that are some good messages.
 
6689

6689 is within the prev sw hi=prev res=potential rbs zone on 4hr and daily and is also 50% 6337-70544 and 61.8% of 6471-7044, Mni talking now about bids on approach to 6700 extending down to that level. Daily S1 calculated pivot is also around there.
 
Yeah, slow morning

Hi Bbmac,

Psychcology is really the hardest part of trading. Just thought I'd post my two lovely missed trades this morning! Rev A and Re-entry 1 to downtrend. Didn't take because of lack of confidence at time, seems a difficult market with no direction.

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Guess we need to await the NFP before any volatility (hopefully) occurs.
 
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Hi Bbmac,

Psychcology is really the hardest part of trading. Just thought I'd post my two lovely missed trades this morning! Rev A and Re-entry 1 to downtrend. Didn't take because of lack of confidence at time, seems a difficult market with no direction.

Guess we need to await the NFP before any volatility (hopefully) occurs.

Hi ,... yeh I had an 0811 Rev Extr with 15min Rev Aii seq, then that 0826, 0842 and 0911 Re-entry 1,2,1 respectively of which I traded the 0842 and have just traded the 0959 Rev A with 5min Rev C supporting but bottled @ +4 on 1st entry as price seemed to breech the 6720bids-mni, (was probably collecting stops lol) only to get in again on the 1min bullish thrust @ 1010. Supporting 15min Rev A seq, 30min Rev Aii seq and 1hr Rev C set-ups gave confidence for this, to say nothing of the previously posted 4hr hidden div based Re-entry 1 developing.

Will look for a decent long entry set-up (s) from the 6700-90 potential support if price reaches it
 
1st obstacle to upside recovery

1st obstacle to upside recovery is the 1hr previous swing lo=prev supp=potential sbr zone shown on 1hr screenshot below;

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