mvpmgp
Education

The Pound-Dollar Uncertainty

FX:GBPUSD   British Pound / U.S. Dollar
With the whole trump and brexit madness going on right now, what could we say about the future?

With the GMMA indicator showing signs that we are in oversold/start of trend reversal territory aswell as oscillators such as the CCI and Stochastic RSI telling us we're in oversold territory, what should we expect in the longevity of things?

Yet the Weekly graph as of this moment in forex is showing large upward momentum indicating a potential for a big move soon, most probably because of price injections to the pound over political unrest in the USA.

What is your take on this? I'd love to hear your opinion, please leave a comment below and like to spread awareness.

My personal opinion is that the UK is moving towards a softer brexit which would be the most economically saturating outcome for the pound,however, due to the major uncertainty for businesses within the UK how can anyone be sure? Adding on to the fact president Trump's idealism of a wall that must be built to ensure safety in America.

Based solely on TA however, i feel as if a big move may be coming however no signs of reversal have been shown and i feel as if trading this pair should be based upon market sentiment.

Thank you for reading!

Disclaimer; i want to create non-biased educational analysis' aswell as analysis' in the future, to help me provide the best analysis' possible and the reader to gain the most out of this analysis please do not be afraid to criticise my ideas as i am eager to co operate and learn more from the industry!
and yes, i know multiple oscillators are not always necessary but i do like to use multiple in order to provide verification that this is not a one off, for example, the AC oscillator is looking towards bullish momentum on the weekly graph but it may be wise to wait for confirmation if you are trading this pair.

Comments

I am delighted you have taken the time to construct your analysis and set it out so clearly. The GMMA (Guppy) indicator is hardly seen on Tradingview - it is quite useful from my experience.

My summary view relative to the weekly time frame is that probability is still for the south.

The geopolitical situation with macroeconomic importance, has caused loads of people to get very excited. So we see that in the recent pump north.

The trouble is that all these people are listening to the same news sources and their minds are being influenced in one direction (even unknowingly to themselves). So in their minds, based on what they've been told, it all looks good for the Brexit negotiations. The stampede has caused 'everybody' in those bullish candles to be afflicted with FOMO.

I won't be surprised if this stampede causes price to rock up to 1.36. It is possible to exploit FOMO but not be part of it, using a trend following strategy on a time frame lower than the weekly (it's just much safer).

But from my analysis on chart below, this is a bear market on this weekly time frame (only) - at this point in time. I choose my words carefully.

What's not in the news (and not negatively affecting minds of traders), are the deep problems affecting the EU-Britain relations. So - it's mostly positive news. Traditional media is there to spread the word of 'the authorities'. There is a different reality circulating in reputable non-traditional media. I am unable to post here without risk of breaching the house rules.

The current assumption by all in the bullish weekly candle(s) is that 'it's gonna be good' soon, meaning weeks or months. My reputable sources inform me differently.

The other problem is that GBPUSD is a ratio - and a lot of people forget that or are oblivious to it. So - they do not consider what might happen with the USD part of the ratio. This is what happens in stampedes of hope. So - what if USD strengthens in demand over the same time frames? Surely the ratio will be under pressure for the south. There are 4 broad scenarios with many others in between:
1. GBP strengthens and USD remains in unchanged demand => GBPUSD moves north.
2. GBP strengthens and USD increases in demand => GBPUSD stalls or begins to move south.
3. GBP stalls and USD strengthens => GBPUSD goes south.
4. GBP stalls and USD stalls => price of GBPUSD ranges.

None of the above really matters if one picks a suitable trend on a lower time frame and exploits it for as long as it will deliver.
Reply
mvpmgp Captain_Walker
@Captain_Walker,

Thank you for your in-depth analysis and feedback on this post!

May i care to ask what time intervals you are using on the GMMA? as it shows the trend very well and i commend you for this, i have been using the indicator for awhile now and have found it a very valuable indicator and it amazes me as how it has such low adoption on here with the value it holds.

After seeing your input i can gladly say i agree with you as there hasn't been a proper trend reversal and is looking like a selloff is likely to occur when fomo runs out, as well as the fast paced appreciation in the pair finding resistance and being a bear market adds even more to the probabilities at stake, it looks as if some excitable trading opportunities are ahead for this pair to say the least and i find it shocking that so many people are oblivious to the fact it is a ratio and i believe that to trade this all aspects of the scenario need to be taken into account which is shown by the strengthening/weakening within currencies you provided and i hope this will help other traders out there to understand the entire concept of fiat pairs.

I will definitely be following this pair to see what course it is to take and also agree with 1.36 being a potential target for this rally if the upward momentum is to be sustained in the near future but one thing is for sure;
An exciting time is ahead for this pair and i wish you the best in trading it if you are to make an entry and i am very appreciative to get such a detailed response on my first post on here as it helps so much and it looks like a great opportunity ahead for traders who are switched on within the space.

In the end of the day, only the test of time will tell but as of this moment its looking like a good shorting opportunity to me.
Reply
@mvpmgp, About the GMMA, I don't really pay much attention to the settings. I do not use it to find entry or exit positions. I use the flow of its lines to better see the trend pressure (instead of having just 3 EMAs). I use all indicators together in a certain hierarchy (which is only slightly flexible). This way I avoid conflicting indicator signals. It's easier to send you my GMMA settings in a screenshot. Will send by PM.

Your post was well constructed and thought out. I tend to reply to traders who deliver real substance, as you did.

I think that with GBPUSD those who are patient for the right entry position, and not afflicted by FOMO will be the real winners. I care nothing if the price gets to 1.5 and I'm left behind. As I go on I'm becoming more brutal in staying out. :)
Reply
mvpmgp Captain_Walker
@Captain_Walker,

That sounds good to me. :)

Thank you, appreciated feedback i shall look to provide constructed consistency for future in my posts.

It seems like the right mindset to have, if you miss an opportunity you've got to think of it in reversed psychology, that you're not missing your money (as long inflationary pressures are outperformed elsewhere we could argue) if the opportunity were to not play through, we could also talk about quantitative easing and the likely hood of price injections into economies and what effects it could have on this pair and others as well as the instability in global economies and the early recessionary pressures that may be coming to light.

Either way, i think ill end up trading this pair on lower time frames because there's going be some interesting activity ahead and if you end staying out i respect that because some of the best decisions come from gut feeling and personal views on the matter, Good luck either way :)
Reply
@mvpmgp, Nah.. I don't do gut feelings and my personal mantra is that consistently profitable trading is not about luck. :)
Reply
mvpmgp Captain_Walker
@Captain_Walker, didn't see the notification of the reply earlier, i don't personally believe in luck but i do believe that its your call on the final judgement of the scenario and if your gut says no because you don't want to take the evaluated risks from the trade based on your analysis then its always your call (think i phrased it badly in my previous response as i didn't define what i meant by it) luck is just a man made concept to me and i believe more in probabilities in trading to be honest but it was nice talking to you and i look forward to what the future holds :)
Reply
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