02 Jan Will The £ Keep Taking a Pounding? Full GBP Analysis…
I’ve no idea of the answer to that question right now. Bank of England Governor Mervyn King recently warned in the event of a Eurozone collapse we could see a rush of investors buying the British Pound taking it to unsustainable levels. The MPC is likely to expand it’s asset purchase program of £275 billion which I think GBP is already pricing in, however as the UK Government, believe it or not, remains ahead of the curve in it’s deficit reduction program we could see GBP become a safe haven, more likely now that the Swiss Franc is messed up with the Euro Peg.
From a technical view point there doesn’t seem to be any absolutely imminent trades to be taken, but there are some interesting things to watch out for.
Price currently right at the bottom of it’s range at major support. If the support does break I’d be concerned that it’s a fake-out and would want to wait for a failed re-test before entering short. Alternatively if you are bullish, a long entry at this support would give a very clear picture of where to place stop losses. The pattern certainly looks like a Head and Shoulders pattern with 2 shoulders on the left and it’s quite feasable that we now begin to carve out a right shoulder, albeit likely to be more shallow than the previous one.
I was fooled by this pair into buying the break out from this triangle which clearly failed. Next step is to wait for a clearer picture. It’s the stuff of dreams but a big spike (BOJ Intervention?) to those converging MA’s right at the bottom of the triangle would be a wonderful short entry.
As you will know I have bullish visions for this pair but the chart isn’t confirming them…yet! Currently watching how price deals with this support on the 4 hourly time frame:
And that support combines with this trend line on the daily time frame, showing 2 annotated trade-able possibilities:
This one is currently trading in a range on the 4 hourly chart but MACD does seem to be indicating further weakness. I’d be interesting in entering short with tight stop loss on another test of the top of the range or alternatively entering short on a back-test of the lower red line if this support were to fail:
Finally we have a chart where the end result seems almost too obvious…. surely trading isn’t this easy? Make’s me nervous just looking at it.
Firstly a long term daily chart, definitely doesn’t look bullish does it, and those 2 red lines in the previous congestion zone appear like a very attractive target:
Moving to the shorter term and I’ve had my eye on this gap for ages. In fact, I closed a long position on the day of the 2011 high and had my eye on this gap even then…I did switch short soon after, if only I held on to it. It’s got to be an almost certainty that we’ll see this gap get filled in the near future:
Moving right out to the Quarterly chart and MACD is rolling over whilst the 20MA sits just 40 points above the current print. Any retrace beyond that MA at 0.8380 prior to the daily gap fill would have me very interested in opening a long term swing short:
If I enter any of the trade possibilities detailed in this post I will leave a comment underneath the post or alternatively provide an updated analysis.