GBP/USD 5-30-2007
Until today all of the 4hr bars closed within the range of of the 12:00 GMT bar from May 24 until 12:00 GMT May 29, When we got a close below that bar. They were all inside bars until today.
This indicates that May 24 bar was S/R and May 29 went up to test the top of that bar. That May 24 bar is a range bar. It may not look like one at first but relative to the bars around it, it has to be considered a range bar.
In addition, that May 24 bar is a bear pivot bar of a complex pivot with the swing bar being the may 23 12:00 GMT bar. So, even if we didn't consider the action since may 24 a test of the range bar we would have to consider it a test of the bear pivot swing bar from the 23rd.
So, that's the two reasons price went where it did and because this situation represented double resistance that's why it stopped where it did. When you add this situation to the fact that there has been thin volume because of the U.S. holiday weekend none of the moves since the 23rd have been true moves anyway. That's why I made no blog posts until today.
What really happened today was that operators moved the market up on the 29th just high enough to take out the stops above the high of the 23rd, which was easy enough for them to do because of the thin volume. Most institutional traders won't be back until the 30th and once again true moves will begin. yesterdayday's action was just preparation for todays action.
As far as where we go from here, the GBP has formed a bear pivot on the 29th below the close of the long green range bar. I expect the GBP to go up and test the top of this range bar and bear pivot and then continue back down to test the bottom of this long green range bar.
On the daily chart this green range bar is a bull pivot bar and this pivot needs to be tested. The consider that the 29th on the daily bounced off the top of the upper trend line on higher volume and did bounce down hard. Combine this with the fact that GBP is in a down trend and the probabilities favor a continued test down toward the daily bull pivot point.
Then we throw in the weekly chart that formed a bull pivot outside bar last week by 1 pip, the open of this outside bar needs to be tested and just happens to be at the bottom of the daily and 4hr range bars.
Jerry
This indicates that May 24 bar was S/R and May 29 went up to test the top of that bar. That May 24 bar is a range bar. It may not look like one at first but relative to the bars around it, it has to be considered a range bar.
In addition, that May 24 bar is a bear pivot bar of a complex pivot with the swing bar being the may 23 12:00 GMT bar. So, even if we didn't consider the action since may 24 a test of the range bar we would have to consider it a test of the bear pivot swing bar from the 23rd.
So, that's the two reasons price went where it did and because this situation represented double resistance that's why it stopped where it did. When you add this situation to the fact that there has been thin volume because of the U.S. holiday weekend none of the moves since the 23rd have been true moves anyway. That's why I made no blog posts until today.
What really happened today was that operators moved the market up on the 29th just high enough to take out the stops above the high of the 23rd, which was easy enough for them to do because of the thin volume. Most institutional traders won't be back until the 30th and once again true moves will begin. yesterdayday's action was just preparation for todays action.
As far as where we go from here, the GBP has formed a bear pivot on the 29th below the close of the long green range bar. I expect the GBP to go up and test the top of this range bar and bear pivot and then continue back down to test the bottom of this long green range bar.
On the daily chart this green range bar is a bull pivot bar and this pivot needs to be tested. The consider that the 29th on the daily bounced off the top of the upper trend line on higher volume and did bounce down hard. Combine this with the fact that GBP is in a down trend and the probabilities favor a continued test down toward the daily bull pivot point.
Then we throw in the weekly chart that formed a bull pivot outside bar last week by 1 pip, the open of this outside bar needs to be tested and just happens to be at the bottom of the daily and 4hr range bars.
Jerry
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