Short term
/
Sell
Trade view / 04 January 2018 at 11:37 GMT

Dark clouds suggest contrarian trade in sterling

Technical Analyst / FuturesTechs
United Kingdom
Instrument: GBPUSD
Price target: 1.3280
Market price: 1.3550
Background

Everywhere I look, people are calling GBPUSD up to 1.40. But the last couple of days have formed a rather foreboding "dark cloud cover" candle on the daily chart and today we're struggling to retake 1.3552, which is Marabuzo resistance. 

I'm willing to risk 30-40 ticks to see if this is a top.... 

Management and risk description

We're only going to risk 30-40 ticks on this trade as it is counter to the recent trend.

Parameters

Entry: sell at market (currently 1.3545-50).

Stop: above 1.3575-80.

Targets: trendlines that currently sit at 1.3430 and 1.3280.

Time horizon: one or two weeks.

Daily candlestick showing dark cloud cover" formation:
GBPUSD Daily
 

Weekly chart showing September's failure point of 1.3669 is a big Fibonacci level as well:

GBPUSD Weekly
 
— Edited by Michael McKenna

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2y
alki alki
Good day Clive, happy New Year! All signals point higher...
2y
Cesime Cesime
Good morning Clive and happy new year, yes very risky to go short however have a pending at 75
2y
Andrew Perkins Andrew Perkins
HNY Clive
2y
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
Only "risky" if you don't have a stop! Otherwise worth the risk of a small loss! ;-)
2y
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
As I said in the title of the piece this IS a contrarian trade. Happy New Year, all.
2y
Cesime Cesime
yes Clive a 40 ticks sl
2y
Alan M Alan M
The political situation still isnt spectacular in the UK, this might not be that contrarian after all!
2y
wang fei wang fei
how about gold?
2y
Morris Morris
Normal behaviour at key Fibs! Bullish
2y
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
Hi wang fei, Gold looks good for further upside while we're above 1300 and dips are being bought at the moment. 1347 and 1362 are the targets. It wouldn't surprise me if we go sideways for a bit now as we did come a long way in a very short space of time.
2y
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
If you're still in this trade I'd say stick with it (We did print 1.3588 overnight.... Grrr0. Even better seling EURUSD all the time it stays below 1.2000 might be worth a dabble as the break here gave a small "Double Top" sell signal that shows up nicely on 4 hour chart..
2y
Alan M Alan M
Did you manage to hold on today Clive?? I got taken out on that spike at 4pm, I think it was fixing flows.. To add insult to injury haha
2y
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
Same here Alan. The euro shorts looking more attractive though. EURJPY should give us an Evening Star on the daily the way things are looking...

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