Forex Gbp Usd
GBP / USD Pre-Budget Special: Forex Trading Technical Analysis
The objective of the proposed emergency budget to reduce the burden of massive debt in the United Kingdom, which is now higher than all EU countries except Ireland and Greece. To do this, you have to make deep cuts in public spending and increase taxes.
There is concern that if too severe will derail the fragile recovery, alternately, if not short enough rating agencies may downgrade the country and will be much more expensive to borrow in the international market money markets. Its task will to try to navigate a middle path.
The long-term outlook for the GBP / USD has been in a downtrend since '07 when it reached maximum of more than two dollars per pound. Was recovered in the spring of '09, but since the fall of '09 was again in decline. On May 20 sent a new low $ 1.4229 and has since climbed back up to reach the highest of $ 1.4936 today – but the downtrend is still very dominant.
A useful way to forecast market movements is by Elliot wave analysis. The longer term wave structures not concern us here, but suffice to say most bearish interpretations are counting down the high momentum '09 as a probable intermediate and the rally from May 20 low minor wave 4 correction of that impulse, which when completed will give a final wave down, probably at historically low levels. Ellioticians The big question for now is, has completed wave 4 or not – and, by definition, has started the wave 5? The guidelines Prechter's book 'The Principle Elliot wave is the wave four usually stop in the territory of wave 4 of lesser magnitude, "Closer to the level of his term." While the first part of the directive has been met – when prices hit $ 1.4730 – the second is, not the end of wave 4 of lesser degree is in $ 1.5526 – a long way up. So the evidence is not conclusive.
Another rule used to measure whether a wave 4 is over invokes the help of the MACD oscillator. Wave 4 is said completed once the MACD line has passed through the zero line (after the ends are reached at the end of wave 3). In the case of GBP / USD however, which is not the case so that the wave 4 still has to go – but if that is higher than one can not say – that might well be set aside for a while. However, this provision the possibility of a strong wave down.
A final way to anticipate the wavelength 4 was initiated by Bill Williams in his book "Trading Chaos". It uses measurements of the wave and Fibonacci relationships and the use of this method we find that wave 4, if it is the minor / intermediate size can have many weeks left to run – possibly more than a dozen!
To summarize, the three methods covered two still imply that correction is way to go, and finally, that there is great possibility of wave 4 has more to go.
Looking now in the short term seems to be the next wave 20 May is a pure minimum 3 wave zig-zag. Moreover, the first and last wave of equal size. On the last wave until it looks complete and may even finished on Friday. This implies that in the short term the market may decline. The next wave could come back down as much as 61.8% of the first wave or as little as 38.2%. If we take 50% of the median then the objective of a correction becomes $ 1.4575.
Now looking at trend lines, the rally has reached now an important trend-line from November '09 high and this could also provide resistance and push prices down. This is also the top line Channel downward motion.
Support and resistance are giving fierce resistance at the 1.48 level. In fact 1.48 is a key level in the graph: there is a historical support of the March low and the same level provided resistance in April '09. 61.8% Fibonacci retracement of the bull market is also '09 at 1.48, 1.4850 to be precise. While we have made the greatest day in 1.49s, which could not control and fell back below the 1.48 level until late tonight so this level has stubbornly to a halt progress.
The highs earlier today also hit the bottom of the cloud Ichimoku which usually serves as a good resistance. This also is bearish in the short term.
Finally, the dollar index was at today strong reversal. On Thursday and Friday which showed doji candlesticks in a line of substantial support for $ 85.00 before the big green candle today. This is a sign that in the short term there could be a move up.
In summary, the technical evidence does not give any definite clue about the direction of head movement Next, although there is a downward bias in the short term. It is more likely that the financial statement will lead to the indecisiveness and not by conviction. If there is a movement, then is likely to fall to the technical tests in the current rally resumed.
The evidence is compelling that we are only at the beginning of an extensive correction that takes much longer to go. Any drop now be temporary. The market should recover in the coming weeks and possibly make new highs in the 1.50s. In the longer term, however, wave 4 eventually end – and when it becomes more likely to continue downward.
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FOREX Trading Review Video 07 APR 09 GBP/USD
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