Consolidation ending? AND Words of Wisdom upon Reflection
GBPUSD
BIAS: Short-term neutral (for now). Long-term Long.
GBPUSD's month of consolidating maybe ending. If so, expect long opportunity maybe this week, but most likely next week.
Only thing GBPUSD has offered since mid July has been range trading. Selling around 1.566-1.568 and taking quick profits. Buying ~1.55 with price rejection and taking profits around 1.562-3. It's been a consistent trade, especially on the sell side. Now, it's showing signs of coming out of consolidation and continuing uptrend. It is very early in the process...way too soon for a multi-day trade situation.
RECENT PAST HISTORY...On 8/4 I observed short-term pattern break and a potential for a substantial move down. I was correct, but didn't play the trade well. I was too early on 8/5 and got stopped out and unfortunately only caught some of the move on 8/6. On 8/7 it made a strong break through 1.54656 support during the first part of the day. Upon it's initial move, I thought it was in the midst of making a strong break and could continue to 1.5330. In my mind, I knew I didn't fully take advantage of the 8/6 move and thought I might have another opportunity. The completed 8/7 pin bar illustrates I was wrong and the Bulls won that battle. Fortunately I never entered a trade. After the initial move, I was waiting for a short entry set up that never materialized. As the day progressed, I recognize the situation and changed my short-term bias.
REFLECTION...The events above are a good reminder to a few truths I would do well to trade by...1) Don't trust perceptions in the midst of a battle. Big moves are often big rejections in disguise, so wait for confirmation. 2) Never get locked in on one scenario. Consider multiple possibilities. 3) Feeling overly confident in what's going on should always be a big red flag. Take a step back. 4) Guard trading decisions from emotions (past success, failures, and the biggest danger for me, recently missed opportunities). Treat every trade as a brand new situation. Know thyself...I know I can be overly eager after a recently missed opportunity.
POSSIBLE OUTCOMES OF CURRENT SITUATION REGARDING MID - LONG TERM EXPECTATIONS:
1. Could make strong move through resistance zone. I don't expect this scenario, but if so would face moderate resistance at 1.5787.
2. Contract and remain in consolidation. If so, we'll have a wider resistance zone.
3. Contract followed by strong move through ~1.573 where ~1.5689 becomes new support. Depending on strength of move, 1.6000 would be the next target with TP around 1.5925.
4. Additional scenarios are always a possibility.
I expect #2 or 3 to have the highest priority to play out, but will watch and wait for confirmation. If it's #2, my bias is #3 will still occur, but just delayed. Long-term bias is uptrend will continue.
As far as short-term...I am currently on the side line, however I am tempted to see if I can capture 40 - 60 pips by going short on the pull back. I'll explore that possibility and see if a short intraday set up occurs today &/or tomorrow.