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GBP-USD Mid-Term Outlook: Is Cable Losing Grip?
By Benny Nardino | February 14, 2008
The recent weeks of market turmoil has created a dim financial market outlook for the future and that includes the forex market. Should that bother you as a forex trader and how does this impact on your forex trading?
Well, a great deal perhaps. The subprime challenges, capital and equity markets, consumer spending all these were significantly affected. These in turn affect the interest rates, the macro economics and reports which delivered to measure the health of our countries’ economies.
Over the past few weeks and months the effect have been played out in the media and the equity market echoing fear. In the UK, the Northern Rock debacle hasn’t help. The last few weeks has seen GBP-USD, made a critical U-turn ’south’ and the GBP-USD pair, otherwise known as ‘Cable’ have been coming down like an avalanche from 2.1200. Here’s the bigger picture from my monthly-chart analysis on the right.
I first spotted this breakdown on my weekly chart analysis in mid-November but paid no real attention. At the time 1.8900/1.8800 support level did not seemed plausible. Now, looking at the chart above the market has gone full cycle.
In the meantime, let’s focus on the yellow spots of the charts where the action play are. Both charts reveal Elliot Waves. Chart#2 showed that there’s still a downward slide to run. From a personal perspective, I am looking forward to a support of GBP-USD play within the 1.8700/8300 fulcrum (the shaded area) in the mid-term.
In chart#2 on the left, waves #1, 2 and 3 have already taken place while wave #4 is also in progress. Technical indications have also confirm this but how long it could last is an impossible speculation at the moment.
There may be times when certain opportunities come which defile your set-thinking process where you may have to trust your inner-self to win. This was definetly one for me. At the time of analysis the trend direction seemed right but could not find any’trading trigger’ confirmation. But though my instinct was telling me otherwise to take a position. I chose to ignore it because certain parameters were not met. By not taking that opportunity I have now been proved wrong.
The market have since moved significantly down south. If I had invest just 1-lot, I could have made over 1,500 pips by now. On the contrary, does that make me a bad trader? I don’t think so but it goes on to the saying that “.. You can’t win them all”. It means I am a more discipline steward over my money.
However, the current economic climate of fear and recession buzz words is creating negativity and uncertainty. As long as these words remain, the trend and the threats will will always remain.
Have a great day great trades
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