We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The $USD may return to the offensive as markets flee to cash amid fears of deep global recession thanks to the still-raging #coronavirus outbreak. Get your US Dollar update from @IlyaSpivak here: https://t.co/g1us4ZbYR5 https://t.co/detT6m6ZKo
  • The #Dow Jones, S&P 500 and #DAX 30 have bounced after aggressive declines. Can this momentum last? Trader positioning seems to be offering mixed signals as technicals point bearish. Get your market update from @ddubrovskyFX here:https://t.co/DdCUyoGSmL https://t.co/NQtbwy5Brg
  • Reports that London-based fund managers have discussed long market closures with the Bank of England are unlikely to bear fruit, but that they happened at all may boost already-crowded haven trades. Get your EUR/CHF market update from @DavidCottleFX here:https://t.co/mernf5MDH3 https://t.co/1rzQT6ClCY
  • $AUD chart positioning suggests prices have set a swing top near the 0.62 figure. Re-engaging the long-term downtrend against $USD may follow. Get your AUD/USD market update from @IlyaSpivak here:https://t.co/OIEDlId6HZ https://t.co/CzqJf3wsgh
  • The $USD could be on the verge of regaining upside momentum against ASEAN FX such as the Singapore Dollar, Indonesian Rupiah and Malaysian Ringgit. Will the Philippine Peso follow? Find out from @ddubrovskyFX here:https://t.co/cBzPejcNHu https://t.co/4fcImOiSzD
  • $NZD chart positioning suggests the downtrend against its US namesake may be resuming but trader sentiment studies flash warning sign for sellers.Get your NZD/USD market update from @IlyaSpivak here:https://t.co/NUHD43A8C9 https://t.co/K7l3Ju0GP0
  • The Federal Reserve has made a powerful statement about its commitment to shoring up offshore $USD funding markets through the #coronavirus spread. Get your market update from @DavidCottleFX here:https://t.co/fLZjxjr4L9 https://t.co/UdRor0d92U
  • The #Euro has dropped through support guiding it higher from late-March lows, suggesting that the end of a corrective rebound has given way to downtrend resumption. Get your $EURUSD market update from @IlyaSpivak here: https://t.co/gpKowYNmGi https://t.co/CY7RuZf91s
  • What are a few of the common trading mistakes made by traders? Find out from @WVenketas here: https://t.co/Q3sPmP2rya #tradingstyle https://t.co/ayjehPGEeT
  • $USDCAD came close to taking out the 17-year-high just a few weeks ago, but this was followed by an aggressive pullback down below the 1.4000 handle.Get your USD/CAD technical analysis from @JStanleyFX here: https://t.co/aWmL2rlWzG https://t.co/cauVFdBxsd
GBP/USD and GBP/JPY Enter a Technical Pressure Zone

GBP/USD and GBP/JPY Enter a Technical Pressure Zone

2016-06-28 13:59:00
Jeremy Wagner, CEWA-M, Head of Education
Share:

What’s Inside:

-GBP/USD and GBP/JPY are in potential pivot zones simultaneously

-2 tools (SSI and GSI) can help you determine a potential shift higher or continuation lower in price

-Watch equity markets for additional clues of a risk rally

The historic moves in GBP/USD (1793 pips from high to low) and GBP/JPY (2690 pips from high to low) from Friday have left many chartists scratching their heads. Trend followers love these moves, but get nervous that the move is possibly extended and overdone. Will prices bounce higher to relieve the compression?

During times like these, it is important to take a step back and look at the bigger picture. In doing so with GBP/USD and GBP/JPY, we see prices are on top of a technical pressure zone, or hot spot which simply suggests something is about to give.

GBP/USD Weekly July 2014 to Current

GBP/USD and GBP/JPY Enter a Technical Pressure Zone

Chart prepared by Jeremy Wagner

In viewing the GBPUSD daily chart, the descending price channel stands out. We are near the lows of the channel and the pair has formed an equal wave pattern beginning July 2014. The equal wave measurement is seen as the 1.000 horizontal line on the chart. The pattern measures the length of wave “A” and projects areas for wave “C” to possibly terminate. Alternating waves like “C” versus “A” tend to have an equality relationship or Fibonacci relationship. Since prices are at an equal level, it warns a reaction higher is elevated.

The equal wave measurement is not an exact science. I’ll consider the equal wave pattern voided on a move below 1.3000 where wave “C” winds up being 110% the length of wave “A”. At that point, the door is opened to the 1.618 extension near 1.17 (not shown).

GBP/JPY Weekly Chart 2011 to Current

GBP/USD and GBP/JPY Enter a Technical Pressure Zone

Chart prepared by Jeremy Wagner

The weekly chart for GBP/JPY is simultaneously trading near the 78.6% retracement level. This level sits at 134.15 and is considered the retracement of last resort. That means if prices don’t bounce here, then it could lead to a retest of the 2011 lows near 117.

To have two different Sterling pairs trading near a potential pivot zone is something worth raising the antennae for. We don’t know if prices will bounce higher or continue lower, but there is an elevated probability of a bounce.

How do we know if prices bounce higher or break lower?

We’ll never know for sure until after the fact. In this case we can call upon two tools to help us determine if the mood and momentum are shifting or indicating a continuation.

  1. Speculative Sentiment Index (SSI) – This is a contrarian tool where a shift towards a higher ratio favors shorts. A shift towards a lower ratio favors longs. The current ratio is +1.63 and you can keep track of the real time SSI here.
  1. Grid Sight Indicator (GSI) – This tool looks at historic intraday price patterns to see how many matches there are to the current market. When applied near support levels like indicated above, it can provide a clue if past historic moves were higher or lower. Follow GSI for GBP/USD and GBP/JPY on ‘m5’.

Yesterday, we published an article on US equities and namely Dow Jones Industrial Average. The pattern is still in a technical uptrend and dips are being considered to buy while prices are above 16,500. I mention this because higher equities prices may indicate a risk rally which may relieve the compression on GBPUSD and GBPJPY pushing them higher. Something to consider keeping an eye on equities as well.

Suggested Reading:

British Pound May Bounce as Markets Digest Brexit Blood Letting

GBP/USD Driving Equities and Volatility, Likely to Persist

Brexit Aftermath Analysis Directory

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

To receive additional articles from Jeremy via email, join Jeremy’s distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.