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

Karmo

I have been following this thread for weeks and appreciate all the knowledge youa nd fellow traders supply. pls advise what "TL" means. Thanks

TL = Trend Line

TL=trend line

The GBPJPY is on many traders minds as the pair approaches the 240.00 figure (again). The pair has recovered about 62% of its July-August drop from 251.10 to 219.30 but individual patterns in both legs of the cross and the cross itself warn that now is not the time to turn bullish for a test of the high. http://www.dailyfx.com/export/sites/...-07weekly1.gif
A simple RSI study suggests that the GBPJPY may be in for a much bigger decline. In this chart, the bars are painted red to signal when RSI is below 40 and blue to signal when RSI is above 60. The blue and red designate the trend as bullish or bearish. The black bars are more or less consolidation periods. If a trader were using this information in a strategy, directionality would be determined by the last colored bar (blue or red). Since 1998, there have been 5 bearish signals. The first one was obviously good. The next 3 were false and the most recent signal occurred in August. The advance since should be viewed as a consolidation.
From an Elliott Wave perspective, the rally from 192.62 occurred following the breakout of a triangle. Triangles lead to terminal thrusts. In other words, price comes back to the center of the triangle following completion of the breakout rally. The rally is in 5 waves (not labeled but the form is clear), indicating a high probability that a top is in place at 251.10. In this case, the center of the triangle is near 200.00.
http://www.dailyfx.com/export/sites/...-07weekly2.gif
If you follow the daily technicals, then you know that we have been favoring a rally to 118.00 to complete the corrective rally from 111.59. 118.12 is where wave C (from 112.59) would equal wave A (111.59-117.12). Equal legs in an A-B-C correction are quite common. The next level of resistance is the 119.34/84 area (61.8% of 124.13-111.59 / former 4th wave). In summary, we are looking for a top and reversal in the 118.12/119.84 area.
http://www.dailyfx.com/export/sites/...-07weekly3.gif
The GBPUSD decline from 2.0654 is clearly in 3 waves and is therefore corrective. However, the advance from 1.9879 is far from impulsive at this point as every top overlaps with every low. Since the rally is not an impulse, and therefore not a 3rd wave is expected to break above 2.0654 , then what is it? We proposed a double zigzag count in the technicals a few days ago, which we still see as the most probable count (a double zigzag is a complex correction). If the rally is corrective, then the everything from 2.0654 is part of a larger correction such as a triangle or a flat. Under this interpretation of the pattern, price is expected to exceed 2.0494 but then reverse.
http://www.dailyfx.com/export/sites/...-07weekly4.gif
If the two legs of the GBPJPY cross (GBPUSD and USDJPY) are expected to complete rallies soon then the GBPJPY will do the same thing. The count is similar to that of the USDJPY. An A-B-C correction from 219.30 is nearing completion (wave B is a triangle). The Fibonacci zone of 238.95-244.29 (61.8%-78.6% of 251.10-219.30) is where the reversal is expected to occur. Similar to the GBPUSD, the decline from the top (251.10) is corrective but so too is the advance. The rally that ends in the Fibonacci reversal zone will be wave B within a large A-B-C decline from 251.10.
The USDJPY rally is expected to end somewhere between 118.12/119.84 and the GBPUSD near 2.0500. Multiplying the rates suggests that the GBPJPY rally should end somewhere between 242.15 and 245.67 (mostly within the Fibonacci reversal zone).

reading too far and too deep .. thanks..

Ok, I appreciate your explanation but it's over my head so I see things differently.

I can't see this going beyond 239.20 before getting a nice retrace or possible reversal.

Two charts attached. Focus on the sandy-brown boxes. On the daily (first chart), we have resistance at the top (left) and if you look at volume (bottom of chart), it is weakening. This is a good sign for the bears.

On the 30min (second chart), price increased 100 pips on low volume. I use volume as a strength indicator so this bullish trend we have is fairly weak (according to my analysis).

Lets see next week. BTW, volume cannot always be trusted on currencies.

I guess I'll toss my amateur analysis hat in the ring. For Longer term direction I use regression analysis. Looking at my weekly chart below it shows we are still in a slight downtrend.

Price wants to and will gravitate to the aqua center line while bouncing between the brown lines and the further it deviates the more likely it is to pull back. Statistically there is a 5% chance that price will breach the blue line (2 sigma) and less than 1% chance that it will breach the red line (3 sigma).

What does this mean? Its simple. When price hits the blue line there is a 95% chance of a significant retrace or outright reversal, and if it touches the red line its a 99% chance.

While these lines are moving targets, right now the blue line is about the 239.70 area and red is 244 area.

That being said, I'll be shorting this bad boy at 239 for a long term trade and expect it to retrace to 236 at the very least or 231 one a bigger retrace. A reversal could send this guy to sub 219 before the bulls force a rally. Just my 2 cents.

1. Download this issue at www.futuresandoptionstrader.com/rtyu12.htm
2. Download last month's issue at www.futuresandoptionstrader.com/xfgr70.htm

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No offence, just discussion, isn't this chart too slow? if short according to it, it gonna miss the major trend, my 1 cent.

simple chart may be easier to read, i really doubt how serious that potential retrace can be. I actually thought it should've happened this week, but it didn't.

The weekly chart, just watch the price, clearly more up than down potential. I believe the price speaks with more weight.

Sometimes, we get confused by complex system, just my 1 cent, no offence.

No offense taken. If you mean its too slow since its a weekly chart then you are right. I am just posting it to show what price may do this week and the following weeks. It also appears to be inline with what many of the great contributors have displayed so far. Its always amazing how so many ways of TA come to the same general conclusion.

When I say I'm going to short it at 239 area I'll probably be holding that trade for a few days/weeks as a long term trade.

Most my trades are intraday trades similar to auslanco's in which I hold them for a few hours in most cases but I always try to consider what the greater picture is.

4hr qqe 5 has crossed upwards. looks like we are heading towards daily 100sma 239.66 area..

Good luck everyone

hi anybody

Who's system is complex? Mine certainly isn't. In fact, my primary system is nothing more than the basics. I may use more advanced methods for confirmation but the basics rule.

I will trade what my analysis tells me, plain and simple, accept the result and move on (whether it be favourable or not). It's up to the market now to determine my result.

I've been reading everything I can find about these harmonic patterns, loving it!

Going to try some trades this week based on these patterns and see how they play out.

so, Thank you Zoran

Good trading to everyone. I guess the Japanese on on yet another vacation, so nothing is going to happen for a while.

Just got back from seeing the Steelers play. 90 degrees (32 C) in Pittsburgh in mid October. Don't tell me that the climate isn't changing.

Glad I could help out. Just remember that I use harmonics as confirmation only (not in isolation). The basics rule and my charts would look fairly plain so I like to spice them up with these patterns when they confirm.

Are you still loaded with your shorts Zor?