I spent most of today at the Shares Magazine Forex Trading Conference presenting on “What I Wish I’d Known When I Started Trading” – I’d been led to believe that 70-80% of the attendees were complete newbies and planned my presentation around that. In the end probably 50% of people had been trading for more than 12 months so may have found my speech somewhat basic. Nevertheless the points I raised were useful for traders of all ages and experiences.
Anyway onto more interesting points – it was an interesting day for the UK and in particular GBPUSD and the FTSE. Lets take a quick look:
At today’s conference I talked about how that even for a committed Technical trader like myself had to be aware the Fundamentals can trump Technicals in a trade set-up and GBPUSD was a great example of this. I recently blogged about how the long running daily upwards channel had been broken to the downside and that I was waiting to see if we would get a move lower. The Technical Analysis channel had been broken and then over the next few days price started to demonstrate bearish price action with lower highs as price edged downwards. That was until the end of last week when BoE Governor Carney commented that rates may rise faster than the market expects (or words to that effect) which was enough to change the direction of GBPUSD and push it back to its recent highs. Earlier today price actually traded above the 1.70 handle – the first time its traded there since August 2009 – nearly 5 years ago! (I remember that week well – but for all the wrong reasons!) I was asked today whether price will go higher and was the Scottish Independence vote holding Sterling back? My answer was yes to both. Markets hate uncertainty and even though the Sterling sentiment is strong that indecision will be weighing on the price and prevent it from rocketing even higher. However if price can get above and close above 1.70 then I see 1.7450 as the next resistance level and then you have to wonder will 1.80 act as a strong magnet?
I posted earlier on Monday about how the EURGBP had closed below 0.8000 on a weekly basis and how 0.7960 was the next support level. As you can see from the chart today’s price dropped to that level (not a massive move by any means) and then bounced off that 0.7960 level this morning. My plan is really just to sell pull backs in this currency as I believe we will see continued GBP strength and continued EUR weakness.
UK FTSE 100
I recently posted about the FTSE and wondered about which way it would go from its present position. Was it a continuation Triangle pattern looking explode higher? Or was it a Double Top reversal pattern getting ready to roll-over and drop?
As you can see it didn’t really do either!!! If you were to look at it I’d say we ended up with a Triple Top reversal pattern with resistance zone around 6865 proving pretty resilient. However what was of interest today was how the FTSE gapped lower on open and continued to stay lower – not closing the gap. Was the because of the news from Ukraine over the weekend? Was that from news out of Iraq & Kenya? Was that a hangover from Carney’s comments last week? Or was it a hangover from England’s loss to New Zealand in Rugby and Italy in the World Cup? (Don’t laugh – you’d be surprised by the effect such events can have on people’s sentiment!)
Whatever the answer maybe (and it may well be a mixture of all of them) price closed lower and didn’t fill the gap. That is something for me to watch over the next few days – watch and monitor and trade what you see!