GBP In Near Term Stalemate vs USD

Against the tide of USD strength, we have seen GBP recouping some of its Brexit based losses, with the Cable moves (eventually) through 1.2000 from early October being redress to some degree. EUR/GBP has been the key driver more recently, given the USD buying theme since the US elections. The EUR cross rate has been well contained on any material bounces, as the EU political landscape has soured considerably in recent weeks/months.

selection_107However, .8425-30 is a major tech level in the cross rate, with .8333 lower down key for UK corporates (is 1.2000 in the inverse rate) for hedging purposes. As such, near term gains in Cable may struggle into the 1.2550-1.2600 area – as it has this morning, so we look to have a near term stalemate developing and some much needed relaxation in volatility as Brexit concerns slip out of the limelight for now.

Average Range Bars

Why I like Average Range Bars, and the Price Action Channel so much. Our entry is just after the rejection of the ‘inverse range low’ and two former Points of Control.

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According to Dean Malone who created the Synergy system of averaging bars (similar to Heiken Ashi but modified slightly for Forex markets) and the ‘PAC’ – the Price Action Channel (twin yellow average lines); the PAC was based on an institutional strategy of being short below the PAC and long above it.

GBPUSD ‘Breakout’ Trade

Breakout in the sense that GBPUSD broke previous session low. However you really need to be in well above that level, ideally that mini ‘double top’/supply are, not when price is contesting previous low.

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Target 127.2 hit, with 141.4 next. 161.8 being ‘hitting the jackpot’ level!

UPDATE

GBPUSD indeed hit 161.8 extension, though quite convoluted as it retraced back up to 78.6 extension (the rejection at 50% and 78.6 levels can be clearly seen.

15 Minute Chart
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5 Minute Chart

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The previous session low very close to the previous weeks low didn’t help. I don’t usually go after the 161.8, as its usually more of a bare knuckle ride, as opposed to ‘set and forget’