Interesting piece of information released by Bloomberg today. Barclays Capital was stopped out from its position in EUR-GBP. It is reported that the investment giant went short at 0.9178, targeting 0.8500 level. Trade was stopped out at 0.9340. Article reported a loss of 1.7% on the position. Well, the underlying asset moved adversely by this percentage point, but the actual loss would depend on many other factors. An option strategist was quoted in the report as saying that major sell off in this cross is still expected, with 0.8500 area to be reached in 3 months. Have they reloaded and entered shorts again?
Normally I don’t pay attention to what other people think or project, which simply confuses me, by clouding my own analysis. This caught my attention because of own renewed interest in EUR-GBP, short term as it is for now. I’m not sure why Barclays would release publicly information regarding any single trade, unless it was leaked out by an employee, but I took a look at longer term charts, wondering what they would reveal. As it turns out, not much.
Monthly chart, which is not used by many for trading, is in a consolidation mode. If one is bearish, it could present couple of opportunities. One if the price reaches previous high, creating double top. Another one one a move under the low of 0f 0.8500, with an objective of maybe as low as 0.7700 or so. All of this take very long time, more investment that trading. Nothing right now, though.
Weekly chart is also consolidating, with different clues. Should current candle close as a reversal pattern, some kind of shooting star or other bearish formation, one could attempt to go short early next week. Objective would indeed be 0.8500, risking maybe 150 pips. Not too bad. However, if the price continues higher and reaches last high of about 0.9800, shape and speed of current advance indicate even more lofty highs some time down the road. At any rate, my customary time frames are much smaller and that’s where I focus my attention, but this weekly chart will be revisited over the weekend.
Here is the 1H chart I covered yesterday. Price continued to move lower, almost reaching 100SMA, which often acts as a support/ resistance. FIB levels have to be redrawn, and that’s how they look currently. Ideally, I’d like to see the price move as high as 0.9365-0.9370. At that level risk/reward is very good and I’ll probably simply enter it at market. However, entire zone between 0.9340 and 0.9370 could be treated as entry on emergence of reversal candlestick pattern, targeting 0.9300. After that 0.9250-0.9240. Waiting for a reversal to form.
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Do you use monthly charts for trading? Seems that you are much shorter term trader.
I think that Barclay’s are putting out false information as a comparison with 2 year swap spreads will show the reason why eur/gbp rose so much recently – euro yields rose and sterling’s fell. Any investment bank would have access to this information. I reckon it’ll hit parity before the end of the year!
Forex is still a mystery for me, but these posts help demystify it a bit.
Gunnar, no, I don’t use monthly for trades. Don’t have the patience and dedication needed to use them, but find analysis usefull.
Wilson, yeah, no reason for them to disclose trades, but I also doubt Barclays would be “leaking” false info on purpose. Its probably rumor on top of second hand rumor and so on.
I just bought:) it after reading about FIB lines and deciding it had reached it’s turning point. That’s if you use the Oct 1 low. How do you determine which low to use?
Because now I went to the daily chart, which I’ve never used, and think the June 17th low is the proper one to use which would put the buy at pretty close to .8899, which also happens to be close to the 100SMA, right?
I normally focus on most recent swings. If you are looking for a top/bottom which is currently forming, it is an ASSUMMED extreme. Compare what I used for bottom on 1H chart in last 2 posts. This gets adjusted as price develops. You bought EUR-GBP? Hope you had a small stop in place…
[...] had a huge day, with EUR-GBP finally falling by a significant margin. I mean 200 pips move in a day is a lot for this pair. [...]
When I saw the June low I sold it and set a new buy for .8899.
“Assumed extreme” could you elaborate. I thought the whole purpose of the FIB lines was to show you the middle. I thought you went to the last low before the spike up and the top of the spike when you’re pretty sure, as you were, that it’s been set and the middle shows you where it will land. No?
Assumed extreme- in a previous post I’m assuming low was established at about 0.9325 after falling from 0.9410. The low would be confirmed once price starts to reach soem of the retracement levels. It didn’t happen untill this post, when the confirmed low, as measured this way was at 0.9295. Change from 0.9325 of last post.
On daily charts I don’t see a reason to either buy or sell, the way I look at charts, so its hard for me to say anything about it.
FIB levels are not a tool to be used by itself. All they do is to put mathematical divider on a price swing, and have nothing to do with the direction of your trade. You decide based on other means to go long or short. Fibs only indicate possible points at which to enter or exit.
Okay, thanks. I found your Nov 2nd post about the beast: “…Previous low (A) is remarkably close to current high (B). Very often support point act as resistance levels when the trends are trying to revers. It is called “change of polarity’ and happens very often. Another interesting development is proximity of 100 simple moving average, which also acts as a resistance here….”
You also say somewhere that if the 61.something % retracement isn’t reached it’s not done going down.
I don’t recall saying that, but I like using that level, because my stop is smaller than 50%, which is reached more often. Also, I generally don’t use fixed number, but rather look for reversal pattern in that area.