G10 and Defined: Levels, Ranges, Targets

 

And on this day, just 6 days after the BOE raised Bank Rate, GBP normalized. Normalizations for GBP means the range structure is back to normal. As suspected, the bulk of the 260 pip move was accomplished on the same day then ranges began to trade back to flat ways. From Nov 2 BOE decision, ranges compressed in following days from 113 pips, 90, 78, 68 and 70. GBP/USD trades today in a 53 pip range from 1.3167 to 1.3113. Expect more of the same in the distant future.

In the currency pair lead and lag category, EUR will now again takes its rightful place as leader to GBP rather than GBP as leader to EUR. If ever GBP leads EUR, giant market problems exist. Same holds true if GBP/JPY leads EUR/JPY, or AUD/USD leads NZD/USD or USD/CHF leads USD/JPY and USD/CAD or USD/JPY leads USD/CAD. Rightful is USD/CAD always leads USD/JPY and USD/CHF. And this list goes on throughout all the currency pair structures.

Structures? Begins with a pip. A pip is many factors. A pip could be defined as 1/8 of a pip, 1/4 of a pip, 1/2, 3/4 or maybe even 1 full pip. A pip could even define as 1/16. A Treasury yield is defined a 1/32 so why not define pips in the same manner to align apples to apples.

Today includes GBP/JPY but I speak as 148.43. But defined, 148.43 is actually 148.43410. So 148.43 doesn’t actually define as 148.44 but its not 148.43 rather its closer to 148.435 and is a 1/2 pip. JPY pairs are historically classic for calculation to fraction pips. Its reason why USD/JPY could never outperform USD/CAD because CAD works on far higher pip values.

Pips define the ranges and the range as most important aspect to understand in currency trading epecially today under the new market structure. Structure is defined as ranges and they are fixed by the central banks but specifically held by interest rate traders. Central banks set the term of market trading and market traders adhere to the terms and conditions.
Here is every traded pip today for EUR/USD as an example.

1.1725, 1.1692 1.1684, 1.1676, 1.1668, 1.1661, 1.1654, , 1.1650, 1.1651 1.1649, 1.1633, 1.1625, 1.1617, 1.1609, 1.1602, 1.1595, 1.1591, 1.1588 and 1.1568. Look at 1.1595 to 1.1602 and 7 pips. Now we have 3.5 pips to define this range or broken down to 1.16985.
Cross off the list 1.1725 and 1.1568 as both are offered today but won’t trade. The area at 1.1588 is also under severe question and would be seen only if an out of sync news announcement hits the markets or a similar event as a missile strike on North Korea.

EUR/USD and most pairs are extraordinarily strange in range trading because intervals from upside to downside never trade exactly nor does intervals between ranges. Above 1.1654, EUR gains speed at 7 pip intervals but gains more speed above 1.1668 in 8 pip intervals.

EUR/USD overall break points are today 1.1615 and 1.1793, slowly are the ranges opening wider for EUR/USD and all currency pairs. EUR goes higher on a break of 1.1661 to 1.1676 and 1.1692 as target. At 1.1615 is seen only on a break of 1.1633 but massive resistance is sen at 1.1617 and 1.1615.

EUR/JPY. Overall Break points are located at 131.37 and 130.95. Above remains rough as resistance points remain built into the range structure. This has been and will be seen far into the future. The why question is JPY as the reason and not EUR. It means upside for EUR/JPY will be a long hard road. Break points 132.24, 132.42, 132.60, and 132.97. Look for upside targets at 132.60, 132.73 on a break of 132.42. Downside is contained by 131.74 and 131.59.

GBP/USD. Overall break points are today 1.3145 and 1.3113. At 1.3145 is rising slooowly. Targets at 1.3224 is seen only on breaks at 1.3167, 1.3189 and 1.3214. Downside breaks to see 1.3097 is seen by 1.3144, 1.3122 and 1.3104.

GBP/JPY Overall break points are located at 147.85 and 146.47. Target 149.86 is seen on breaks at 149.30, 149.48, 149.55, 149.67. Downside to see 148.52 must break 149.05, 148.81, 148.62.

Brian Twomey