Trade view /
22 June 2016 at 8:56 GMT
We've taken a small GBPUSD counter-trend short this morning and here is why.
The monthly chart highlights a disjointed bullish Gartley formation. It is anyone’s guess, with the Brexit vote tomorrow, where GBPUSD will close. A close near this month’s high and we would have a strong A.M.R candle (acute monthly reversal) in the shape of a bullish Outside Bar.
The daily chart highlights an Elliott Wave five wave pattern complete at 1.3833. We are now in either a complex corrective cycle that should break to new highs or the start of a new bullish trend. All these factors give a positive bias for the medium term. The Marabuzo level from Monday is seen at 1.4569. Bespoke support is at 1.4510. We look for this zone (1.4569-10) to attract buyers once more.
However, we did post a Doji-style candle yesterday after reaching an intraday 261.8% extension level. This offers scope for a short-term correction.
The intraday chart highlight bearish divergence from the high (chart makes a new high while the oscillator makes a lower high). This is normally followed by a change of trend or at least a correction. The two and one-hour charts highlight a bearish Outside Bar from this morning high. This offers a downside bias for today.
With a stop at 1.4716 and targets at and targets at 1.4603 (bespoke support) and 1.4548 (AB=CD formation) this offer a risk against reward trade of approximately 3:1.
Management and risk description
It has be noted that this is a counter-trend trade (at the moment!)
Entry: market (2 units)
Target: 1.4603 (bespoke support) and 1.4548 (AB=CD)
Time horizon: today only
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more