Cable Update (GBPUSD)

This should be really Interesting Next Week Both GU and EU

I hear ya!
I am standing aside with my margin looking for some set ups and value opportunities. We will have many.

Touched and go from 1.5700 this week. But momentum still seem to indicate bears are in control? 1.54 possible?

You nailed it, bro.
Market Sentiment will drive currencies this coming week.
Risk aversion will take it down. Risk appetite will take it up.
This week the price failed before it could take out 1.5900.
This has bearish implications due to the fact that the risk of falling further is still present.
This coming week could bring a change of Sentiment or not. If we see a close above 1.59000, then there is reason to call a temporary bottom and a possible retest up to 1.60 and above.

Let's take a look at the weekly chart for gbp/usd.
The 38 fib has stopped the fall this week, although we see the lower low, when it broke below the July 2011 low at 1.5779. This week's low was 1.5705 where the price was rejected.
Look to the far left of the chart and you will see the left shoulder of an inverse head and shoulder formation with the shoulder low also rejected at the same 38 fib at 1.5706 from October of 2009. Price shot up to 1.6876 at that time, around the middle of November 2009.
The tip of the head is sitting at 1.4229 from the low in May of 2010. If the 38 fib holds as support, then the red 200 sma at 1.6610 is possible, being the top of the Shoulder range.

I zoomed out so you see the left side of the shoulder.

I tried to add some red arrows to illustrate the shoulders and the head of the inverse H&S pattern.

The 4 hour chart shows the rejection at the 38 fib, but the price is trading inside the "River" that is formed by the 5 sma high and low (I "borrowed" that from Auslanco, and others.) At this point in time the price could break either way. Flip a coin. Casino odds. Risk is high for both Bulls and Bears. Buy stops most likely may be sitting above 1.5900 somewhere. It is logical.
Sell stops are likely to be sitting below the river.

Would appreciate your analysis on geppy. Strong downtrend. Only 250 pips away from Jan 2009 low of 118.80.

Thanks.

skillwill

I will take a look at Geppy now and I will post what i see if nobody has any objections.

whats geppy?

I teach my students to understand the long term global financial and political situations in order to better assess the Market Sentiment. Geppy is a Yen pair, and I still consider it a Carry Trade pair.
Simply stated, Risk aversion Sentiment will drive this pair down.
Risk appetite will drive this pair up.

Take a look at the monthly chart to see where the price has been in the past, where it is now and where it is most likely headed in the future. The monthly and weekly chart gives us a longer term view.

We see a very strong downtrend driven by Risk Aversion Market Sentiment, and attempting to form a Double Bottom formation at the previous swing low from January of 2009. We need to see Risk Appetite Sentiment in the marketplace for the bottom to hold. Price is trading below the river and all 4 momentum indicators are in agreement pointing down and sitting below their respective 100 levels (bull/bear territory). For now this chart is quite bearish.
The 5 sma open is trading below the 5 sma close.

The weekly chart is in agreement with the monthly bearish chart.
The Momentum indicators have flattened out.

The daily chart for geppy (gbp/jpy) shows some possible short covering or profit taking occurring the past 2 candles. The price is trading inside the river after a retrace to the 5 sma open.
The momentum indicators show a change in direction but still trading below their respective 100 levels. You can see the crossover upwards of the 10 candle mom over the 14 candle mom.

The 4 hour chart shows some profit taking going into the weekend as Bears have covered their short positions or taken profits around the 0 fib sitting at the September 15 low @ the 1.2066 price. Bulls that bought at 1.2066 have either covered for the weekend or taken profits, as evidenced by the last candle (spinning top). The price has broken above the green 22 sma and has held the re-test so far. Price has, however closed inside the river and the risk of downside still remains but 1.2066 area has held for 6 attempts to break it previously. Count back 8 candles to see where the stops were taken out up to the 1.2234 price level where it was rejected.
It is logical to assume that momentum bulls will have buy stops sitting above the river, where the path up has been cleared.

Strategy for Geppy this week:
Monitor Market Sentiment.
Buy stops above the river to exploit a break out on Risk Appetite Sentiment only.
Stop loss below the 5 sma area somewhere and target a retest of 1.2200.
Limit buy orders (small "tester positions") can be placed at the 5 sma, the green 22 sma, the blue 14 sma, with stops below the river to target 1.2200.

On Risk aversion market sentiment, sell stops are placed below the 5 sma and targeting a double bottom formation @ 1.2066 but accounting for the spread.
It is logical to assume that sell stops are sitting below the previous swing low at 1.2066 price area somewhere.

I hope that I have been able to satisfy your question.

very insightful explanation! thanks

I placed a fib on the stop hunt from the low of 1.2066 to the high of 1.2226, as seen on the hourly chart for gbp/jpy (Geppy) to give a clearer picture of possible support/resistance.

need to learn a lot from you ....

aniway the enemy (my broker ) give 121.191 or 1.2119 to close the week.

have a good weekend my new good teacher ....

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testing bottom ?