Cable (GBPUSD) broke the 38.2 level of the 2015 range.
Not a lot of demand around between the 38,2 and 50% levels to break the fall. Pockets of demand (passive buy orders) much lower
The short sellers came in to ‘squeeze’ the GBPUSD long’s. The squeeze is represented by the dark grey area, which pushed priced through a previous liquidity area (purple outline).
Suits me, because I’d like a much lower price to get long.
As price has not been squeezed below the option barrier and below the previous days ‘inverse range low’ I would expect GBPUSD to at least test the previous low.
Something like this is a viable ‘scenario plan’
Low target two (LT2) is also a possibility at around 1.53475 is also a possibility. At least for a liquidity grab
These are the little ‘ledges’ of demand it helps to pay attention to if like me, you think that you ought to be in a trade, before price moves. This little level on GBPUSD appeared at just below value (where the liquidity is).
Trading (IMVHO) is all about levels and not chasing momentum up, down and all over the chart. The rate of return of passive buyers and sellers, always better than aggressive traders.
A recurring theme of this blog will probably be, assessing where ‘value’ lies. Really you should attempt to buy at below value and sell above it and vice versa . Makes sense?
Bearing in mind that the markets assessment of value is constantly changing due to news events and the fundamental macroeconomic situation.