Week 8 Strategy

Since I have already nailed my colours to the USDCHF mast (see last post) I've concentrated this weekend's analysis on Cable and my GBP risk pairs. I'm going to look at them from Daily Charts down the 1H.

GBPUSD

The sheer scale and pace of Cable's fall, together with clear divergence on the Daily chart at the bottom, makes me feel bullish. Surely it is due a meaningful snap back up ?...



This 4H chart is a little less convincing. The pair has been consolidating all week and whilst the sloping 4H support line has held, it has been tested twice. Whereas, the pair failed to make it up to sloping 4H resistance, instead being turned back by closer horizontal resistance.

The longer it consolidates, the larger the potential breakout (No s**t Sherlock !), but, my feeling is - increasingly - that the first big move will be back to the downside.

But, what I think is absolutely irrelevant, as the next breakout of the pair's current consolidation zone is likely to be significant enough to 'take-out' sloping support or resistance lines and tell-us which way it's headed.

Tactically, this leaves us with 2 options:

1. Either, trade a (significant) 1H breakout from the 1H 800 - particularly if it closes outside the closing S/R pennant.

2. Look for divergence and reversal candles at the limits of the pennant and trade back into the 1H 800.

GBPJPY

Whereas Cable remained rangebound last week, the 'Yippon' (our coloquialism) managed to break out to the upside, but was temporarily turned back by 4H sloping resistance; an earlier trade report details my trade of this move.

However, it hasn't fallen back far and looks like it wants to have another go...

However, even if it does break through it soon comes up against the Daily 62 ema and the previous high at 137.28.

So, for the meantime at least, there isn't a trade to the upside for me. I will be looking for reversals - on divergence - back to the 1H 800 sma.

GBPCHF

... Is different in that the recent up-swing on the Daily chart was not predeeded by MACD divergence - weakening the argument that zest for the downside is dwindling.


And look at all those 'indecsion' candles on the Daily...

On the 4H chart I note Upside MACD divergence and the fact that (unlike the Yippon), it hasn't managed even to challenge sloping resistance of late.


Finally, I note on the 1H chart that this pair (unlike the other Sterling crosses) still hasn't made it back to the 800 sma.

As you can see, I am bearish on this baby. I think she wants to tank and I wouldn't be at all surprised if she gaps down the 1H 800 at the re-open.

Whatever, I'm going to be watching that (very) near support line like a hawk.