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Cable Update (GBPUSD)

  • #363,601
  • Feb 14, 2014 9:06am Feb 14, 2014 9:06am
Quoting eurusd_trade
{quote} No one's projecting it with no correction. But this time the psychological case is particularly strong. There was never a strong psychological case for 110 (it only went to 105 not 108). Plus before the highs in UJ were 103 so the psychological case was for 105. Particularly as UJ approaches 100, GJ having touched 170 already, EJ having touched 140 already, it only makes sense that EU and GU make the 14000 and 17000 handles at some point. With 75-90%+ shorts to long, we could get there sooner than people think with good impending data. If...
Frankly, it's pointless to debate this, this is just my opinion and it's a pretty strong psychological case that you are welcome to try to refute. It isn't a recommendation to enter or exit at a specific level. The reality is the PA is data-dependent and also positioning dependent so a lot of things can happen but ultimately I think people will gravitate towards this outcome.
  • #363,602
  • Feb 14, 2014 9:06am Feb 14, 2014 9:06am
we're still using retail trading data as a market sentiment tool??
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  • #363,603
  • Feb 14, 2014 9:09am Feb 14, 2014 9:09am
Quoting Citiboy
we're still using retail trading data as a market sentiment tool?? {image}
It's usually not that helpful but when it accumulates beyond a certain extreme threshold at the cusp of a fresh historic or locally historic level it usually has a lot of significance. I've seen this numerous times in the past in UC both on the downside at 0.98 and recently on the upside, in USDCHF on the downside many years ago when it made fresh historic lows, in UJ both on the downside way back at 80 and UJ at the upside last year, etc. The retail positioning all of a sudden blows up to massive quantities right at the edge of making these historic levels. Having seen this so many times, it was obvious to me that GU would end in the same result here. Also particularly with the earlier whipsaw down to 1.63 I knew the "overbought-oversold" crowd would be particularly stubborn once it reversed back higher to 1.66. They'd keep trying to fade every level until they blew up. You could see it in the retail trading data. I hadn't seen this much sentiment in a LONG time simultaneously in EU and GU. And it was particularly stupid too if they just looked at the economic calendar. But no one did.
  • #363,604
  • Feb 14, 2014 9:13am Feb 14, 2014 9:13am
Quoting Citiboy
Any takers here? Selling 1.673x, put an SL above 1.6753ish? Fundamentally Carney's shifts in foward guidance were dovish, as the next rate hike is now based on a much broader set of vague indicators. There are three major UK releases next week as well. IF these releases do not confirm the BoE's rationale for massively hiking 2014 gdp projections, GBP will trade lower. {image}
Why would be selling now? We are going 1.75 Now then 1.80!
In trading, you have to be defensive and aggressive at the same time
  • #363,605
  • Feb 14, 2014 9:16am Feb 14, 2014 9:16am
EURUSD trade
Sorry to put you on ignore list I just can't read you anymore.
In trading, you have to be defensive and aggressive at the same time
  • #363,606
  • Feb 14, 2014 9:16am Feb 14, 2014 9:16am
It would be funny if this is all M&A buying, then the bank traders front run Vodafone buying, which triggers model hedge funds getting in.

Then as soon as Vodafone is done buying, all the bank traders bail out. Model hedge funds get screwed. And its back at 1.64 by wednesday.
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  • #363,607
  • Edited 9:37pm Feb 14, 2014 9:18am | Edited 9:37pm
Quoting Davit
EURUSD trade Sorry to put you on ignore list I just can't read you anymore.
Truth is pain. I'm sorry Davit for your losses. You're a good guy. I hope you have some good trades to make them back I also suggest taking some time off before trading again. Like everyone, I've blown accounts before in years past. While your account isn't yet blown, just step away for at least a month and come back strong. It's the best way.
When I fuck up, I've made it a point to take at least a month off every time. These days the fuck-ups are greatly reduced, thankfully.
  • #363,608
  • Feb 14, 2014 9:21am Feb 14, 2014 9:21am
Quoting Davit
EURUSD trade Sorry to put you on ignore list I just can't read you anymore.
i think a new star has been born
  • #363,609
  • Feb 14, 2014 9:21am Feb 14, 2014 9:21am
Quoting eurusd_trade
{quote} It's usually not that helpful but when it accumulates beyond a certain extreme threshold at the cusp of a fresh historic or locally historic level it usually has a lot of significance. I've seen this numerous times in the past in UC both on the downside at 0.98 and recently on the upside, in USDCHF on the downside many years ago when it made fresh historic lows, in UJ both on the downside way back at 80 and UJ at the upside last year, etc. The retail positioning all of a sudden blows up to massive quantities right at the edge of making these...
That's right. After a week of making new highs and engulfing the last 6 weeks or so, sentiment here on FF is fatally skewed. Oanda is looking about 20%/80% which is probably more realistic but the retail short covering is going to send this higher. In my humble opinion.
Gone to a better place
  • #363,610
  • Feb 14, 2014 9:28am Feb 14, 2014 9:28am
Price is inside my sell zone.
inside 2nd -3rd deviation.My mistake was shorting too early.Lessons learned.Stick to proven method.
You can criticize all you want.Its obvious I made errors shorting early.There I am not perfect.

Principle behind my system is based upon theory that price stretched too far from 20MA 2nd-3rd deviation becomes extreme and often price rebounds back to 20MA.
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In trading, you have to be defensive and aggressive at the same time
  • #363,611
  • Feb 14, 2014 9:30am Feb 14, 2014 9:30am
Quoting Citiboy
we're still using retail trading data as a market sentiment tool?? {image}
fortis fortuna adiuvat
  • #363,612
  • Feb 14, 2014 9:32am Feb 14, 2014 9:32am
Quoting Davit
Price is inside my sell zone. inside 2nd -3rd deviation.My mistake was shorting too early.Lessons learned.Stick to proven method. You can criticize all you want.Its obvious I made errors shorting early.There I am not perfect. {image}

Yes, daily RSI deserves a post of its own.
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  • #363,613
  • Feb 14, 2014 9:32am Feb 14, 2014 9:32am
Quoting Davit
Price is inside my sell zone. inside 3rd deviation.My mistake was shorting too early.Lessons learned.Stick to proven method. {image}
Again, I can write up a BB 20-2 2-3 deviation strategy in Interactive Brokers or MT4 within minutes. For some historical context, GU historically is a major momentum/trending pair. Only recently over the past few years has it turned into this ranging pair. Now it looks like it could start trending again. If it was that easy to make money, I could write up a robot that does exactly this within minutes. Obviously, this isn't reality, and failure to automatically identify trending vs. ranging environments is what will make this system fail. Oscillators can help, with a lot of experience and sensitivity to a ton of different conditions. But as you can see, one mistake and without a disciplined stop can create disasters.

For some context, all you have to do is look at GBP/CAD on the monthly chart. What is it, 7 consecutive MONTHLY candles above 2 deviation BB? It's called walking the band
  • #363,614
  • Feb 14, 2014 9:36am Feb 14, 2014 9:36am
Quoting Davit
Price is inside my sell zone. inside 2nd -3rd deviation.My mistake was shorting too early.Lessons learned.Stick to proven method. You can criticize all you want.Its obvious I made errors shorting early.There I am not perfect. Principle behind my system is based upon theory that price stretched too far from 20MA 2nd-3rd deviation becomes extreme and often price rebounds back to 20MA. {image}
hi davit,

do you have fundamental reasons for your short bias?
fortis fortuna adiuvat
  • #363,615
  • Feb 14, 2014 9:37am Feb 14, 2014 9:37am
Quoting eurusd_trade
{quote} Again, I can write up a BB 20-2 2-3 deviation strategy in Interactive Brokers or MT4 within minutes. For some historical context, GU historically is a major momentum/trending pair. Only recently over the past few years has it turned into this ranging pair. Now it looks like it could start trending again. If it was that easy to make money, I could write up a robot that does exactly this within minutes. Obviously, this isn't reality, and failure to automatically identify trending vs. ranging environments is what will make this system fail....

What is the fundamental basis for a move from 1.63 to 1.70?
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  • #363,616
  • Feb 14, 2014 9:37am Feb 14, 2014 9:37am
Quoting shon9178
{quote} Hi fx-gtg, can I know how you went short from 1.6736? There will be a number of BOE announcements next week tue/wed. Do you think the numbers will fall short to bring down the GBPUSD price?
i don't know if they will bring gbpusd lower, but i just sell at resitance
  • #363,617
  • Feb 14, 2014 9:40am Feb 14, 2014 9:40am
Quoting Citiboy
{quote} What is the fundamental basis for a move from 1.63 to 1.70?
Position - Large quantities retail shorts
Fundamental threat next week - 3 GBP data points next week including the most important claimant count after last month's extremely strong GBP data. Let's be honest, the reward/risk is totally biased to the upside on these numbers. If the numbers come out good, we're just going to explode higher with stops after all this position accumulation. Whereas if it comes out bad, the out of the money shorts will be in a rush to cover as price drops so the price will fall much less.
Psychology - 140/170 EJ/GJ, 14000/17000 EU/GU, 100 UJ, GU leg catching up on GC with UC already moved

Guys, I'm headed off. I think the points are clear. Have a nice weekend.
  • #363,618
  • Feb 14, 2014 9:45am Feb 14, 2014 9:45am
Quoting deltaone
{quote} hi davit, do you have fundamental reasons for your short bias?
To be honest after Bernanke last tapering I anticipated Yellen to continue that trend.My mistake was I should of waited to see her testimony.
Its a huge fk up on my part.
On a bigger scope EZ economy is pathetic and UK biggest trading partner is EZ hence I don't see EU at 1.40+to complement Cable new possible highs.
Correlation is too great.
In May Greek elections coming and new fresh crises for EZ and likewise IR raise is 1-2 year away so cable 1.70+ is unrealistic expectation considering micro fundamentals.
In trading, you have to be defensive and aggressive at the same time
  • #363,619
  • Feb 14, 2014 9:48am Feb 14, 2014 9:48am
wait for pin bar or gap down for sell
this bitch is bullish
With a good book and quality paper you can fine wipe your ass.
  • #363,620
  • Feb 14, 2014 9:57am Feb 14, 2014 9:57am
Quoting eurusd_trade
{quote} Position - Large quantities retail shorts Fundamental threat next week - 3 GBP data points next week including the most important claimant count after last month's extremely strong GBP data. Let's be honest, the reward/risk is totally biased to the upside on these numbers. If the numbers come out good, we're just going to explode higher with stops after all this position accumulation. Whereas if it comes out bad, the out of the money shorts will be in a rush to cover as price drops so the price will fall much less. Psychology - 140/170 EJ/GJ,...

Retail shorts are less than 5% of total flows. The leveraged fund community is already long GBP, and probably has been getting longer on this move up. If there weree any massive stops higher they have already been triggered between 1.6650 and 1.6700. In terms of the data, is has not been all good. The unemployment rate is less of focus for monetary policy now, and on th last print the actual number of claimants came in worse than expected, CPI was lower than expected, manufacturing and services PMI were both lowering than expected and have been trending lower for 2-3 months. Retail sales was a huge beat last month, that surely helped the GDP outlook. However in January the more up to date CBI Retail sales report (that foreshadowed a large increase in main retail sales number for December) was way below expectations for January.

Next weeks data will be interpreted through the lens of this new phase of BoE forward guidance. All economic indicators will now have a more significant effect on GBP. Starting with CPI on tuesday, given higher rates on Gilts and a higher Sterling I expect CPI to miss expectations again and ome in below the 2.0% BoE target.

I would bet that a massive portion of this move is corporate buying due to the Vodafone deal this week.

http://www.reuters.com/article/2014/...A0R14S20140128

"This is the largest single return of value to shareholders in history," Vodafone Chairman Gerard Kleisterlee told the shareholders at a meeting in London.

Holders of 99.76 percent of Vodafone's shares backed the Verizon Wireless sale, which is expected to conclude on February 21, with the share consolidation and return of value taking place three days later.


This means that betwen Janaury 28th and February 24th somewhere bettwen $84bn and $130bn USD worth of sterling needed to be bought. Which is obviously a massive amount and explains this bullishness.
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