GBP/USD Nearing Breakout Level – August 17th 2015
Welcome back for another week of trading! To begin I want to cover how the COT data stacked up at the end of last week. As I mentioned a few times I was very interested to see what occurred with the Pound after the rate hike vote was far more bearish than expected. While the buying subsided for the time being there was definitely not a mass of sellers entering the market based on strictly the COT. With that being said it really becomes more of a price action decision than anything else. A major level for me on the GBP/USD is 1.5680 area. If you look at the 4 hour chart you can see just how well the market has respected that general area with many tests of that level when the price was above and below it as well.
Another interesting currency is the Aussie. While the AUD/USD has shown further lows over the last few months the overall net short position is actually much less. The first time I mentioned this was in the August 10th 2015 FX Commentary. If you go look at that article you will notice the divergence in the chart between the price at the overall net position. While this is not a go ahead to be long all Aussie pairs, it is a long term bias that you can take to the chart for short term day trading strategies. Take for example the stop run of the lows that occurred in the AUD/USD last week. Having the long bias as a stronger potential would alert you to the buy side opportunity as the market approached the lows. Other setups occurred in Aussie crosses as well.
The only other interesting point that I took away from last weeks COT report was the Euro positioning in the Asset class. This is the longest term position that is represented in the COT report. As such a bias can last for years in this category. Also changes in direction are much slower as a rule of thumb. With that being said, last week had one of the largest bullish moves for the Euro that I have seen in the Asset class. This is not really a huge piece of information but it would make sense of the market if we see these daily ranges start breaking higher on the EUR/USD and GBP/USD. In that scenario you would then gain a stronger bias for the following week to go long as you would have more tangible data supporting that market movement.
EUR/USD Forms Hourly Chart Double Top
The Euro has broken a major hourly trend line to the upside near the end of last week. After the break the market stayed above it and is now making a retracement to retest the breakout area. This is important information as it gives us a level from which we can gather information. If the market retest this point and begins to work higher then more than likely we have a bias forming to the upside, while a break and hold below begins to give us the opposite bias.
Last Friday I had a really wide set of manipulation points. I was really only looking to trade from the absolute extreme and as the EUR/USD stayed away from the extreme it was a no trade day for me. Today I’m still open on direction and would consider any valid setup from the listed manipulation points. The key point on directional bias will come from what the EUR/USD does on this retest back into the breakout area as mentioned earlier.
GBP/USD Nearly Major Range Highs Yet Again
Last Friday the GBP/USD did provide one valid trade setup for the vast majority. The only difference that could have occurred was on the confirmation candle. Without getting into too much detail the confirmation candle was close to being valid for some and valid for most. With a valid confirmation candle the GBP/USD would have hit a full 4% take profit. I was personally on a short vacation over the weekend and missed the trade…bad time to take Friday off I guess:) If your a DTFL member make sure to check out today’s market preview video for a full break down of the setup.
Out of these two pairs I do think the Pound has better levels to work from and is nearing a major line in the sand around the 1.5680 level. If this level breaks then further upside becomes very likely for the rest of the week in my opinion. As of today I do not have a directional bias. Like most days any valid confirmation entry trading signal will be taken as I do not have a strict directional bias this early in the week.
Forex News For August 17th 2015
For today there is no news that I’m concerned with during our valid trading hours.
Want to learn the bank trading strategy, join our weekly live training room, talk to members in our forum, and have access to lifetime support? Learn more by clicking here.