Auslanco - GBP/JPY and GBP/USD (newstrade)

Going out on a limb!


What I have to say will only disappoint you if you are looking for complex TA analysis or discussion. I probably shouldn't be here since this seems to be all that is discussed... but after all we are all trading the GBPJPY, right?

You ask about a snapshot of my charts. I'm here to learn about this pair and not promote any other trading system or form of analysis but I do use MTF analysis (multiple time frames) and have discovered somewhat on my own that time frames in multiples of 6 seem to produce easier to read wave patterns.

Just simply looking at a simple 4Hr price chart (I use candlesticks) viewing it as waves. It made a big drop 5 time frames (beginning 7-26-07 00:00GMT through 16:00GMT) and subsequently there followed two time frames of consolidation upward (taking a breather) and then resumed the downward move through another 5 time frames into Friday's close with a pause and beyond including the gap down into today’s action. Now it has gone through another two time frames of consolidation / retracement or whatever you want to call it. And, only time will tell what it should be called. For now, it's resting and perhaps attempting to build strength for a continuation down (or up).

Just looking at the time frames and the patterns displayed if the past two large waves (movements) down are any indication of what is to come you should expect this 'pause' to take up to 8 hours (as it has) and then continue on again into the current downward trend should that occur in the 3rd time frame through 08:00GMT. I'm not absolutely predicting what is to come in the coming 3 hours but there is reason to assume from these patterns it may have completed it’s 2 time frame rest as it back tracked up as it has and then turn over and go down to wherever you TA guys might predict it should go. Even Auslanco's best earlier estimate was an entry around 239.90 with a stop as high as 240.92 to anticipate some of this consolidation. We’ve certainly gotten more than intended but it still should be suspected and prepared for.

You can't ask a sprinter (in this case a 440 sprinter) to complete one full lap around the field at a full sprint and then ask him to start another sprint lap without a pause.
One thing to note… these waves often break down after 2 or 3 larger movement so it can never be assumed that it would continue another 5 down and 2 back up. When this trend reversal from bullish to bearish began several trading days ago it didn’t take this pattern. It was gradual. Now only in the last 2 large waves has there been a sharp drop. It will be interesting to see what will develop following this rest.

The last downward wave (244.26 to 238.28) was nearly 600 pips and now we have seen a consolidation (?) wave of about 322 pips to 241.50 and now back down to ~240.50. You TA guys can shed light on what that means.

To me, I see things in waves. I suppose it would have to again move all the way up to and break through and well past ~241.50 (one of the earlier downward moves late last week) before I would consider a reversal in this current trend and resume the greater bullish trend.

Auslanco's earlier recommendation was a SL if it hits 239.92 which affected many here so we are protecting our trading accounts with that guidance... and I appreciate what I am learning from him (generally for now and more specifically in the future) about this particular currency pair and how it behaves. That's why I'm here.

Another thing I like to look at are the psychological price points / barriers using whole numbers in increments such as 100, 50 and 25 seem to add further levels of resistance or support. So, now we may see some further ranging between 240.50 and 241.50 until the market decides to go bullish or bearish. Change that… it below 240.50. I’m back into a profit since I entered at 240.50 about 3 hours ago and I’ve decided to exit at 240.29 for ~100 pips profits on 5 minis. I’ll sit on the sidelines until this 3rd 4Hr time frame reveals the direction of this pair.


Dr. D.