GBP Trading Strategy: Opting for Longer Time Frames

GBP Technical Strategy

The Bank of England (BOE) pressured GBP against a basket of currencies in the Forex market. The -1.5% growth downgrade for 2017 prevented GBP from recovering following the BOE monetary policy meeting. An article written by BOE Ian McCafferty that suggested further easing  may be required within the several months if the downturn is noted in the British economy did not assist GBP. Negative manufacturing data continued to pressure the Sterling in today’s session.

In the past 30 days GBPUSD has been confined into a range, similar to what we are witnessing in EURUSD at the time of this writing. The range has been triggered by central banks monetary policies and great uncertainties of the UK’s future when article 50 is invoked. In order to filter the range and determine the true trend of GBP we analyzed the monthly charts. It appears GBP is poised for strong gains against a basket of currencies, particularly against USD, EUR and possibly AUD.

These entries do not require a monthly close, which does increase the possibility of a limited drawdown before a resumption of the uptrednd. As we are expecting a strong Euro we are dismissing EURGBP.

GBPUSD Monthly Chart

Please click on the chart to enlarge:

GBPUSD Monthly Chart 09/08/16

GBPUSD Monthly Chart 09/08/16

The recent weakness may provide us with a dip-buying strategy on the monthly chart. GBPUSD weakness may extend to 1.2800 before the reversal takes place, which is the potential drawdown (200 pips) for initiating a signal in the currency pair. The alternative is to wait for the reversal to take place and exercise and intraday stop, however, intraday stops combined with monthly entries often implies a greater risk for the success of the trade.

GBPUSD monthly chart also suggests these may be temporary gains. We do not expect GBPUSD to break above 1.3870, which is expected to act as a strong resistance and may very well act as the focal point for a bearish reversal if tested by the market. We have a fair reason to believe GBP reversal is due within the next 7 days, however, we cannot guarantee 1.2800 will not be re-tested.

GBPAUD Daily Chart

Please click on the chart to enlarge:

GBPAUD Daily Chart 09/08/16

GBPAUD Daily Chart 09/08/16

Please note this is a daily chart as opposed to GBPUSD. We have already noticed the potential for a positive divergence on Monday. The dip lower in today’s session may provide a comfortable entry in GBPAUD. The Australian Dollar (AUD) appears to be technically supported on longer time frames, which suggests temporary gains in GBPAUD or a strong GBP. The RBNZ monetary policy that is due on Wednesday will affect GBPAUD due to the price action that is likely to be seen in AUDNZD. To recap, the RBNZ is expected to slash rates tomorrow and possibily announce further easing within the next several months (expectations are for another cut in November).

The potential drawdown is a re-test of the lower support line, which is minor compared to GBPUSD monthly chart.

The Bullish Trigger?

The BOE reverse Gilt auction was uncovered in today’s session. The BOE issued a statement that it will make an announcement on tomorrow at 08:00am GMT. We are uncertain what the BOE will announce but i could be the trigger we were searching for. It may have no affect on GBP pairs and crosses, which if turns to be the case we will fully rely on the charts.

We are still uncertain whether to use entry orders and whether both trades, GBPUSD and GBPAUD should be taken at the same time.

GBPUSD Trade Alert

Please click on the chart to enlarge:

GBPUSD Monthly Chart II 09/08/16

GBPUSD Monthly Chart II 09/08/16

GBPUSD long at market price (1.2999)
Take profit: 1.3650
Protective stop: 1.2779
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 35 days

Note: This is a monthly entry. If our entry is well-timed we should be in a fair profit within the next 7 days.

GBPAUD Trade Alert

Please click on the chart to enlarge:

GBPAUD Daily Chart 09/08/16

GBPAUD Daily Chart 09/08/16

GBPAUD long at market price (1.6946)
Take profit: 1.7380
Protective stop: 1.6798
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 10 days

14/08/16 UPDATE: Although GBPAUD entry is still applicable, the price has dipped below the lower support when the RBNZ published its monetary policy (25bps rate), triggering the protective stop loss order. Although the entry is still a place we chose not to re-enter the market.

GBPAUD Trade Alert (Re-entry)

Please click on the chart to enlarge:

GBPAUD Weekly Chart 14/08/16

GBPAUD Weekly Chart 14/08/16

GBPAUD long at market price (1.6863)
Take profit: 1.7350
Protective stop: 1.6650
Risk Ratio (RR): 1 : 2.5 (approx.)
Estimated duration: 10 days

Note: 1.6742 is the key level, which is why the protective stop is layered below. We debated whether to use an entry order as we we prefer a better price but decided to absorb any potential drawdown. Please note this is a weekly entry.

16/08/16 UPDATE: GBPAUD is trading at 1.6945 at the time of this writing.

Please click on the chart to enlarge:

GBPAUD Weekly Chart 16/08/16

GBPAUD Weekly Chart 16/08/16

We are closing 20% of the long trade at market price. This is a risk management maneuver.

17/08/16 UPDATE: GBPAUD is trading at 1.7047 at the time of this writing.

Please click on the chart to enlarge:

GBPAUD Weekly Chart 17/08/16

GBPAUD Weekly Chart 17/08/16

We are closing 30% of the long trade at market price and shift the protective stop to the entry. We are carrying the trade into the Australian employment data.

17/08/16 UPDATE II: GBPUSD is trading at 1.3038 at the time of this writing.

Please click on the chart to enlarge:

GBPUSD Monthly Chart 17/08/16

GBPUSD Monthly Chart 17/08/16

We are closing 10% of the long trade at market price. This is a risk management manoeuvre.

18/08/16 UPDATE: GBPAUD is trading at 1.7131 at the time of this writing.

Please click on the chart to enlarge:

GBPAUD Weekly Chart 18/08/16

GBPAUD Weekly Chart 18/08/16

We are closing 30% of the long trade at market price and shift the protective stop to 1.7060.

18/08/16 UPDATE II: GBPUSD is trading at 1.3169 at the time of this writing.

Please click on the chart to enlarge:

GBPUSD Monthly Chart 18/08/16

GBPUSD Monthly Chart 18/08/16

We are closing 20% of the long trade at market price and shift the protective stop to the entry.

GBPCHF Trade Alert

Please click on the chart to enlarge:

GBPCHF 4hr Chart 18/08/16

GBPCHF 4hr Chart 18/08/16

This is an intraday entry. We will attempt to capitalize over GBPCHF recent weakness to increase our exposure to GBPCHF. As this is a 4hr entry a relatively tight stop can be used. We are deliberately exercising a tight stop.

GBPCHF long at market price (1.2562)
Take profit: 1.2710
Protective stop: 1.2520
Risk Ratio (RR): 1 : 4 (approx.)
Estimated duration: 7 days

19/07/16 UPDATE: GBPAUD is trading at 1.7240 at the time of this writing. It is a tough decision but we have decided to exit the trade with a decent profit.

Please click on the chart to enlarge:

GBPAUD Weekly Chart 19/08/16

GBPAUD Weekly Chart 19/08/16

GBPAUD uptrend appears to be far from over at the time of this writing. we will be looking to capitalize over dips, possibly as soon as next week depending on the market. We refuse to withstand dips that may be as large as +200 pips on the open trade.

19/08/16 UPDATE: GBPCHF triggered the protective stop loss order following an announced from RBS, affirming negative interest rates will be incurred on its deposits. GBP was immediately sold against a basket of currencies.

24/08/16 UPDATE: GBPUSD is trading at 1.3168 at the time of this writing.

Please click on the chart to enlarge:

GBPUSD Monthly Chart 24/08/16

GBPUSD Monthly Chart 24/08/16

We have decided to close the trade at market price, we will consider a re-entry at a better price. Jackson Hole on Friday is one of our concerns.

Immediately after the update was issued GBPUSD spiked over +60 pips. We have already closed the trade and cannot look back.

GBP Trading Strategy: Opting for Longer Time Frames

As all trades are closed this page can now be accessed by all traders. Open trades and relevant intraday strategies are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
GBP Trading Strategy: Opting for Longer Time Frames

MEMBERSHIP PLANS INTRADAY STRATEGIES OUR TRADE ALERTS
GBP Trading Strategy: Opting for Longer Time Frames

new performance pc edit 9294

GBP Trading Strategy: Opting for Longer Time Frames