Friday Sept 16. 2016. CPI Blowout.
Friday Review. The big break for GBP above was 1.3229 and 1.3232 then more resistance to the day’s top at 1.3296. The range break point above was 1.3447 but 1.3393 had to break to see 1.3447. All last week 1.3270’s was strong resistance and it held. What was seen from the cross pairs in GBP/CAD, GBP/NZD and GBP/JPY as well was massive resistance points above. The message was short and we knew the short information on the Thursday evening post of GBP/CAD. The question was where to target. The side information is GBP/JPY and known intimately because we been trading it 3 times per day for the past 4 months.
The day’s bottom was 1.3160 against reinforced support levels at 1.3155, 1.3153, 1.3141, 1.3138 and 1.3111. The long was taken exactly at 1.3153. GBP continued lower to break 1.3111. The level at 1.3111 was located between a wide daily range from 1.31111 to 1.3035 as next break level. A long was taken at 1.3106. GBP/USD continued lower to break the average of the range at 1.3085 then broke below the next levels at 1.3035, 1.3028 and 1.3010.
The most vital aspect to the lower 1.3035 to 1.3010 levels is 1.3010 was a range point. Levels in currency trading are trade able support and resistance points but ranges are quite different dimensions because they are huge affairs as they become new and solid supports and / or resistance . Yet ranges like levels are dynamic and change daily. To continue, GBP broke the range point at 1.3010 and settled to close at 1.2995. Where was 1.2995? The next range point below was 1.2958 and the next day’s break point level was 1.2962.
Overall from 1.3229, GBP dropped 234 pips and 165 pips from the 1.3160 bottom. To say this was a rare day to break a bottom and continue to travel lower is an understatement in the highest regard. The most rare of events is 2 long lots are down 158 and 111 pips. In thousands upon thousands of trades over the last few years, to be down like this never happens. Bottoms are bottoms, targets are targets and bottoms don’t break except only on rare NFP days. Bottom breaks are actually market gift opportunities to go long. Above targets are market gifts to go short. And all work perfectly as magic.
The strategy. I will refactor GBP based on the new price and I will know if a profit potential exists, exit at break even or take a small loss. The 30 trades at 50 pips or better will continue as well as to post trade methodologies. The vast majority of the 30 trades will trade in GBP/USD and cross pairs, USD/CAD and hopefully in NZD/USD and cross pairs. The 30 trades are extra to my daily trade signals in 7 currency pairs and the 30 trades for a vast majority are mostly hand calculated. So speed is vital.
Why continue. Based on the first day of USD/CAD trades and to leave lots at 1.3170 and 1.3168 as USD/CAD wandered, my feeling is the opportunity presented is lost because the stats won’t meet the criteria. Fat fingers and acclimation to the new system caused the lots to become actual but correct fingers could’ve easily taken the lots out. Further, the missed opportunity at 1.3138 on the spike low was the time to exit for profit. Add GBP to the mix and I’m dead. After the 30 trades then I might perform another 30 trades to be accurately scored and because I know my win rates, targets and the rest of the criteria hoopla is extraordinarily high. Last is the methodologies to post as vital to me personally because I’m seeing aspects to the one model I haven’t seen before and these points not only advanced my further understanding to the currency price but I found ways to make faster and easier calculations. Today I’m going through the GBP pairs then CAD comes and hopefully NZD. I want to get an understanding where we stand in levels and targets for next week. This info will post here. I’m not posting this overall stuff for the public so view the trades and info here if anyone wishes.
Brian Twomey, Inside the Currency Market