I have been shorting GBPAUD along with GBPNZD last week (I posted GBPNZD on TV). However the last few day's we see a lot of analyses on TV telling that the bearish continuation is about to start. This can very well be the case, but breaking trend lines means nothing. If you understand the market dynamic and where price movements really come from, you understand why many analyses posted lately don't make any sense. I don't want to offend anyone but since I'm posting here as well I will warn my followers. Keep in mind that the Brexit scenario is leading the Pound. Structure in all Pound pairs are in a complex corrective combination mostly because of that. This means that we will see many overlaps, many impulses without follow up etc. Although the Pound sold off, no single Pound pair confirmed anything yet and even if we see some kind of confirmation this can be a confirmation of a 3 wave down or 5 wave down. This is crucial when trading structure. I will be looking for a fifth wave lower to confirm that we either see a wave A or 1 lower. Again be careful trading these pairs after such a strong move because it can be erased easily. I don't say anyone is wrong I just say that what has been posted is often not making sense because of the lack of context. I will try to give you some context in this post by means of this easy wave count. Safest trade is to wait for the 5 wave pattern and the correction that HAS to follow. Only once that is in place and confirmed sell the continuation for wave C or 3 and trade with more than 90% probability and less stress and a far smaller stop loss and higher R/R. If you are in the sell from the top you can try to keep the trade open, that is what I plan to do with my remaining position until things change. You can also look for a sell once wave 4 is in place.
We saw the five wave pattern lower to confirm the bearish impulse. Next week I will simply wait for the consolidation/correction and sell the third wave lower. I will not sell from here.
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I'm looking for a consolidation by means of at least 3 waves. Once that is in place I will be looking to sell the bearish continuation. The bottom for wave 5 is only an indication and not yet confirmed.
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EthanNguyen
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Thanks again Tim for your dedication and amazing work.
Agree with you that the next direction of this pair now is still uncertain. RR is not so good on the sell atm.
The short term driver for this pair now might be the OPEC meeting later, if they can't seal a deal on supply freeze which is what the market expected it will drag this pair down another leg but if they can agree on output freeze this pair will fly.
chrisvos
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Nice one!!
sinakhan98
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Hi, I did trade according same analysis but unfortunately I closed my positions around 1.9750 and dont have the guts to open new shorts here at the bottom close to 161% extension of previous high.
Where do YOU see the next high to jump in and short this pair again??
I appriciate your answer and thoughts so I have something to compare with my own. I think for this time GBPAUD will find the bottom at 1.9670 (+- 10) and go higher for next high. Little bit oversold maybe!
Thanks!
TimStuyts
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I'm not looking for a new high from here but only a consolidation followed by a third leg lower. I will update this pair next week because the consolidating structure that has yet to come will help us pinpoint a reversal zone with more precision.
sinakhan98
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Ok but I thought if this 1.618% extension would keep the price from falling this time and give us a better price to short like 1.9830 which is the trendline price tried for days to break.
I appriciate if you explain your thought with a chart when you have time later... thanks!
I don't think there will be anything that keeps the Pound from falling once the Brexit scenario becomes very reasonable (by means of exit polls etc). However in terms of structure we have a bearish impulse as shown by means of the 5 waves lower shown on my update of today. Once we see the consolidation (which is very likely to start soon, I agree with you) I will update again so we can find a good entry to short again. The yellow box in my chart of today is my ideal reversal area for the consolidation to start.
sinakhan98
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Well sure in case of Brexit GBP will lose against all currencies, I agree. But meanwhile the opinion and polls will switch from Remain to Leave and vice versa. But I agree about GBPAUD going down. At least the weekly chart with that huge Bearish Engulfing indicates that and more down movement is on the table. I guess Im just trying to put my short as high as possible :-)
Thanks for your reply, I really appriciate that.
TimStuyts
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Structure tells us that we should expect at least another leg lower after a consolidation. Structure is the only leading indicator for me, so we either see a consolidation to set-up a sell trade or I adjust for the next high probability trade. Let's see what the start of next weeks trading session gives us. Good trading to you!
1.9650 is a strong support, the pair is heavily oversold almost on all TF and 1.9830 is the area Im interested in at the moment. But I wait for your chart before entering the market... thanks!
sinakhan98
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That was the move I was talking about Tim :-)
My order was triggered at 1.9850
Good Luck!
Agree with you that the next direction of this pair now is still uncertain. RR is not so good on the sell atm.
The short term driver for this pair now might be the OPEC meeting later, if they can't seal a deal on supply freeze which is what the market expected it will drag this pair down another leg but if they can agree on output freeze this pair will fly.