SOME HISTORICAL GBPUSD PERSPECTIVE

 

“Yup … pretty much sums up the whole of FX … especially Cable!”

I think with the action we are currently seeing in GBPUSD, that it’s a great time 

to explore some historical perspective on this FX animal … don’t be fooled into 

complacency with this pair, and don’t ever … “evahhhh!” … think, “well, this 

can’t possibly happen to hurt me” … if you do, it’s “toes up” as they carry your 

account out the door to the “Traders Graveyard” in Murder, Illinois, where you 

will find millions of other traders to commiserate with about your misfortune.

Let’s start with 2 charts directly below; the first, a monthly candlestick 

covering 20+ years, overlayed with a 34 EMA LOW (Yellow Line), and the 

second, a weekly candlestick chart with the same indicators as the first, but a 

more recent timeline and history.

 

 

From our [me, Cousin It, & CoS Milton Waddums] statistical analysis that has 

led to the current version of the trading Cable algorithm, the 34 EMA LOW 

(Yellow Line), is the most optimal in terms of monthly profitability … not really 

that useful for us as traders, but if I was managing upwards of $5 - $10 Billion 

dollars of AUM [Assets Under Management], and not simply trading Cable, cuz 

that would be impossible with scumbag LP banks who would annihilate us via 

fills & slippage, but getting long the 1 YR. - 2 YR. Gilts [cuz they pay interest], 

and then writing upside calls for premium and using those proceeds to buy 

downside puts on rallies.

And I think the conclusion you can draw after looking at the weekly chart 

above, is that the reason the market is having trouble breaking lower, is the 

confluence of the 34 EMA low on the monthly, and the weekly trendline 

[white] right where price is now … and there is gonna be “bigly & yuge”  

support here by institutional types, corporate accounts, and other big monied 

interests who are not necessarily trading the market but positioning themselves 

for further down the road … and more than likely, even if Cable does go 

slightly lower and take out 1.34500, there is likely to be heavy demand all the

 way to about 1.33800 … but what is clear from these two longer term charts, is 

the “fact”, not my opinion, that cable is almost never a “straight shot” up or 

down without some huge retracements. I’ve looked on the daily charts going 

back to the start of 2009, and I don’t see any 12 day period where the close for 

12 days running has been within 90 PIPS, from the high close to the low close 

… quite extraordinary for this market. So, bottom line here while it “rests” 

and “chops” people to pieces, is to not get “whacked”, cuz you can’t make it 

back in this extreme low volatility environment … hopefully, this shit ends next 

week.

Turning to today’s GBPUSD market … no way to sugarcoat this; “what a pile 

of dog shit … just a terrible trading environment where it’s 5 steps down and 4 up 

the entire day … kill the longs on sell stops quickly, then obliterate the shorts with 

the burst spikes higher that see 15 - 20 PIPS in seconds … rollover, rinse & 

repeat … and through it all, if you’re watching the order box, the fills and price 

gaps from the scumbag LP’s just beyond the pale … I feel sorry for those who got

really hurt today, and trust me there were plenty that did”.

A handful of trades today … PAMM down collectively about $21.

Directly below, first the M5 GBPUSD with Cable algorithm, and below that the 

daily candlestick. “Look Skippy, another “doji” day with a small fat candle and 

larger tails … gosh, we hardly ever see that”! [Eyes rolling]

 

 

It spikes lower … then gaps higher & in the process it destroys any position, 

long or short in very quick time … throw in ridiculous slippage [remember 

what I said earlier, that when markets get like this to expect shit fills, cuz it’s 

the only way the bank can steal make money], and it feels and tastes like 

victory losing $21 bucks … even the Cable algorithm today had a tough time 

keeping up with the spikes. And once again, we had no volume, no liquidity, 

and most likely no interest in the trade today … maybe it’s the  

“Royal Wedding” … hell, I dunno … but what I do know is that the trading 

action was one of the worst I’ve ever seen for a non Holiday market in a major 

pair … “well, the good news is that I didn’t have any orders that took 6.808 

seconds to fill … seems the 20+ “best of the best” scumbag banks found some 

bids and offers … what a complete and utter shitshow”.

And so, here we are “treading water” basically … a little up, a little down, 

essentially going nowhere while this market figures out what the hell is going 

on and where it wants to go, for the last 12 trading days … frustrating? … hell 

yes, but whaddaya gonna do? … “I’ll tell you: lower volumes and don’t get 

whacked or do “stupid shit”. This too shall pass, and in the meantime, keep the 

“powder dry” and wait it out … it’s the only way”.

Not much else to say about a market that doesn’t know whether to “fish or cut 

bait” … there are way too many shorts in here that feel “comfortable” being 

short … Cable being Cable, and looking at history as a guide, those are gonna 

get skewered most likely sooner rather than later … I’m looking for that lower 

open at 06:00 - 06:30 from Asia, a small lurch lower, and then off that low an 

absolute frickin’ explosion higher that sees price threaten the 1.36000 level once 

again in about 20 - 40 minutes. “Setup” is everything, and I think the market is 

a lot closer to that scenario than most traders suspect … we’ll see, but both 

Cable and EURUSD are extremely oversold, and I don’t think it would take 

much to start a short term raging fire on the upside.

So, onto next week, and let’s hope Cable gets out of the pure shit it’s been stuck 

in for the last 12 trading days … “good grief, give us some movement here will 

ya”? … and with that, as I look up from my laptop, the dog thinks it’s time for 

bacon … Hell, anytime for him is a good time for bacon … “Wait, lemme ask 

him … OMG!, settle down”!! … I’m outta here … until Monday mi amigos 

… Onward & Upward!!

I haven’t had the time to post the PAMM trades to the spreadsheet & I’ll do it 

early this evening and post it directly below.

UPDATE: Saturday, 3:20 P.M. EST: “Well, early evening turned into Saturday 
afternoon … who knew”? Directly below the PAMM Spreadsheet.

 

  Have a great weekend everybody!

-vegas

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