retracement due???

A bullish hammer on the daily chart indicates that a retracement might be due; however since the overall trend is still downwards, I will stay out for the time being.

There is a possibility that the price might want to test the two upper trendlines as shown on the chart below. I will watch if the price bounces off the trendlines before going short again...

Happy trading.


  • Doesn't it look like Doji on the daily chart that you posted? Anyhow, technicalities aside, last week this pair registered a doji (on weekly charts)and so far it stands to finish this week as an "inside week" if retracement does not lift it higher tomorrow.

    Exactly the same picture applies to GBP/USD. Therefore, it seems at least next week (if not more) we will see GBP strength. What do you reckon?

  • A doji candle to me; indicates that market is in uncertainty. More confirmation is needed to determine next direction.

    Even if the price breaks the candle's high, it is still in retracement mode.

    Trend reversal to the upside is only be confirmed when the price closed strongly above the upper trendline on the H4 chart.

    Just my humble opinion....

  • Agree on that, it is still a retracement.

    Do you trade mostly based on trendlines? I do not see any MAs there?

  • GJ Trader is right, it is bullish, I came 2 days ago and I said that that the inverted cup and handle might not work this time and that the pair will turn higher. Today GJ Trader said is turning higher and he is right and this might be a significant BOTTOM for the pair, meaning going bullish. SIMPLE: go fundamental, today BOE will keep same policy but at the next one, BOE will tighten the policy wich is good news for the pounds, in the meanwhile you have the earnings season, sounds promising. This will all work out if the governor will not come out again saying that he doesn't care about the Sterling as long as the economy recovers. Other than that, there is no reason for the Yen to appreciate for now.

    Tah Tah'

  • I live in London & my job includes reading a bit of economic research. In short, the economy here is shaky, also from what I see on the ground. Some analysts think it might be double-dip next year since the government has run out of firepower to stimulate the economy and might have to raise taxes instead to cover deficit which is not good for growth. Therefore, it seems the BoE does not mind GBP weakness for the time being to support growth. As to the November meeting, I am not sure at all they will raise the rates. They are simply not in a position to do so.
    One large FX hedge fund, whose research we get, puts USDJPY target at 87.7 and even 85.5 and expects JPy strength into early November with turn coming in early December.
    BUT these are all opinions and nothing is more important than the price action itself.
    I can send you guys a couple of research pieces if you like.
    In the mean time, Iam already long this pair but as long as i do not see moving averages to finally cross over, I will not commit myself seriously on the long side

  • Dear all,

    Thank you for all your comments. Appreciate it very much. I am purely a technical trader; even though I do keep the fundamental aspects in the back of my mind.

    I trade mainly based on the chart patterns, reversal candlesticks and S/R - no MAs or indicators on my charts.

    Even though the cup and handle patterns failed; based on the double top pattern on the daily chart, I still hold my outlook that the beast still possibly go down further after the current bull rally subdues.

    Having said that,I appreciate all the comments as all of us are still learning and no one is right all the time (including myself)...


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