Trade Idea: GBPUSD Long
DISCLAIMER: Hi everyone, this is just a log book for me on applying everything that I have learned and continue to learn as I go along. That being said, I do not advise you to base your trading on these "ideas".
I have been following this pair since it reached newer lows from December of last year. Resistance area of 1.25240 was broken on July of this year, giving us the notion that price would keep dropping and especially after the Boris Johnson election as Prime Minister. Brexit decisions coming up on October 31st, there is a possibility of seeing the GBP drop some more. But before that happens there will need to be institutions and big banks need to take profits, sending the price back to the upside before October 31st and then going on a full downward spiral.
Lets take a look at some fundamentals:
Here we have the daily chart from 2016 where we see a large sell after the UK voted to leave the EU. Thats where we saw the first move down to the 1.9850 price level, the lowest the GBPUSD has ever been. Big institutes, banks and hedgers started taking profits from shorts. You may remember the scandal about hedge funds using independent polls to make millions on shorts (bloomberg.com/news/features/2018-06-25/brexit-big-short-how-pollsters-helped-hedge-funds-beat-the-crash). Buyers came in and brought the price back up to 1.42850, which is a strong support and resistance area.
On April 17th we had some strong economic moves push the price lower. We had U.S. Building permits increase, UK unemployment stayed the same, and UK and EU negotiators discuss a post-Brexit trade relationship. Bringing the GBP back down for the rest of the year to the 1.25240 zone, the lowest of 2018.
Next on our economic calendar we have the upcoming October 31st, 2013 date which is when the UK leaves the EU.
But lets look at the technicals:
Lets take a look at some Elliot waves, we are finishing up the 3rd wave and about to start 4th wave.
Coming down to the daily chart and using our fib. retracement tool, we see that the 0.382 retracement level is right on the 1.25240 price zone that has acted as support and resistance. That retracement will be the fourth wave.
Trading the Fourth Wave:
The fourth wave of our Elliot wave which will we are expecting to retrace back to the 1.25240 price zone, which is also the 0.382 retracement level. The price also needs to reach the 1.25240 price zone before October 31st, 2019, when the UK leaves the EU. On that day we can expect HUGE volatility, massive moves and most likely a huge move to the down side.
For now, I do have a small risk, small reward long position which I intend on closing before October 31st, 2019. I will not be trading Brexit.
I have been following this pair since it reached newer lows from December of last year. Resistance area of 1.25240 was broken on July of this year, giving us the notion that price would keep dropping and especially after the Boris Johnson election as Prime Minister. Brexit decisions coming up on October 31st, there is a possibility of seeing the GBP drop some more. But before that happens there will need to be institutions and big banks need to take profits, sending the price back to the upside before October 31st and then going on a full downward spiral.
Lets take a look at some fundamentals:
Here we have the daily chart from 2016 where we see a large sell after the UK voted to leave the EU. Thats where we saw the first move down to the 1.9850 price level, the lowest the GBPUSD has ever been. Big institutes, banks and hedgers started taking profits from shorts. You may remember the scandal about hedge funds using independent polls to make millions on shorts (bloomberg.com/news/features/2018-06-25/brexit-big-short-how-pollsters-helped-hedge-funds-beat-the-crash). Buyers came in and brought the price back up to 1.42850, which is a strong support and resistance area.
On April 17th we had some strong economic moves push the price lower. We had U.S. Building permits increase, UK unemployment stayed the same, and UK and EU negotiators discuss a post-Brexit trade relationship. Bringing the GBP back down for the rest of the year to the 1.25240 zone, the lowest of 2018.
Next on our economic calendar we have the upcoming October 31st, 2013 date which is when the UK leaves the EU.
But lets look at the technicals:
Lets take a look at some Elliot waves, we are finishing up the 3rd wave and about to start 4th wave.
Coming down to the daily chart and using our fib. retracement tool, we see that the 0.382 retracement level is right on the 1.25240 price zone that has acted as support and resistance. That retracement will be the fourth wave.
Trading the Fourth Wave:
The fourth wave of our Elliot wave which will we are expecting to retrace back to the 1.25240 price zone, which is also the 0.382 retracement level. The price also needs to reach the 1.25240 price zone before October 31st, 2019, when the UK leaves the EU. On that day we can expect HUGE volatility, massive moves and most likely a huge move to the down side.
For now, I do have a small risk, small reward long position which I intend on closing before October 31st, 2019. I will not be trading Brexit.
Disclaimer
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