This Key Level On GBPUSD Will Change Sentiment

Good data caused GBPUSD to rally. But if this key level doesn’t hold sellers are still in control medium term.

Hello everybody I hope you’re well. Let’s have a recap of what we’ve looked at the past few videos to see what’s going on. So the Dow is just melting up as we expected. However we haven’t had a buying signal yet, we’re waiting for one close under that five period moving average to buy and then looking to sell on the subsequent close above the five period moving average. That hasn’t happened yet. We did somewhere just tag it,  just gave it a little kiss today but that wasn’t technically a close, so there’s no trade from that and keep my eye on it. I might be a bit cautious if it happens tomorrow or over the weekend, holding over the weekend but if it happens mid next week then we could be game on there.

Let’s have a look at Netflix which we were trading yesterday – or looking for a trade yesterday should I say, in yesterday’s video. So we talked about how we were sitting in this range, this sort of 86 to 84, 490 range, buy on a break above the range with the stock below. That didn’t quite set up at the close yesterday which is kind of good because you don’t really want that risk if you don’t have to have it, but this morning we opened up, came down and tagged that, almost to the tick if you were watching it, if not,  you had your order in place there, you were fired off straight away pretty much, and now we’re long and we’re looking for a push up toward the 90 levels. A $2 profit in that straight away, where it goes from here who knows. I’m going to pull the stop up to that a little bit tighter. In fact let’s put a view app on there and see where we are relative to the pulling weight average price.

We are still nice above it, one tag of the view app wouldn’t be too much damage. If we started going too far below it, I’ll look to take some profits on that, otherwise I’m going to look to hold this and see if we can get a couple day run out of it. So that nice little trade setup there, not much risk relative to what we’ve got out of it, but let’s have a look at what I think is nicely setting up today. Let’s go back to a daily chart of GBP/USD.

Okay, so we all know the whole back story with GBP / USD, well specifically the Pound, I happen to be looking against the Dollar here, but specifically the Pound… Rolled over on Brexit, we really tried to push up but, we are not doing that well to be fair. However, one thing I want to point out and actually it was brought to my attention by a trader, thank you very much. We have tagged the… oh, you know what, I need to change this to a 20 period. Now as I said before, sometimes we use moving averages to guide us and often when you get a drive lower, like this, a good surprise drive, then you come back up and you often tag that 20 period moving average before you roll over again. Now we had that and ultimately, we have made a double top there, fine. People have made some good money from that, but, what is interesting to me now and this is this is actually a trade setup that you can extrapolate or I like to extrapolate across all markets. Now if we look at the news we had today on the Pound, let’s put it on a fifteen minute chart. The Pound is looking reasonably weak after yesterday’s action, it’s pushing lower, pushing lower and all of a sudden, boom, we get some spike to the upside which basically was the unemployment rate had fallen to something like 4.9% and this was for the period of March to May, so the pre-Brexit period where everyone was a little bit concerned. It doesn’t cover right up to Brexit of course, we had the Brexit vote late June and now obviously the subsequent fallout from that. So we’ve still got that data to come and generally traders perceive that as bullish and that is why we saw the Pound spike up from there from 1.308 to 1.318 – good spike on the Pound and it’s holding those gains.

Now, where is the trade in this? I’m interested in taking a short below that 1.308 level. Why? Because ultimately if you think about the reason behind that trade… The reason behind that trade, or the reason behind that whole price move is that people are bullish on the UK economy, everything’s looking great, unemployment is down, it should be positive for cable. However, if we go below that level with that “good news” in inverted commas suddenly known, then that tells me the bears are fully in control. Okay, so if we now drift below that level – it may never happen, we had a similar situation with the Yen and we never got it, that’s fine, we don’t take the trade.

If it does dip below that level I’m looking for sure entry and I’ll probably end up putting my stop above there or I may tighten it up somewhere, find a little bit of a tighter place to put it and then look for a subsequent move back to the 1.3.

So that’s potentially setting up. If it doesn’t set up, fine, plenty of other stuff out there. That’s what I am looking at. Let’s see what tomorrow brings. Have a good evening.”