Get Mark Chapman's Free Trapped Traders Calls and Learn How To Trade - Click here:
We’re going to take a look at the GBPUSD today. Fundamentally, we know what’s happening in this pair. You want to be buying USDs even though the USD had weak sentiment surrounding it for the last month or so. That doesn’t detract from the fact that the USD is the fundamentally strong currency pair out there. The GBP, on the other hand, is fundamentally weak and we’re heading into our Brexit negotiations now. Much anticipated. So, the likelihood of continued uncertainty in the UK, plus geopolitically from a political perspective, the UK itself is in a state of flux due to a hung Parliament.
But the conservative government have the majority, but they don’t have enough to form a government and therefore they’re having to go into business with the DUP, Northern Irish political party. However, that deal has not been done. The election was a couple of weeks ago now. Apparently they are asking of some fairly hefty figures in terms of investment in Northern Ireland, so that deal is yet to be struck. So, again, just continued weakness as far as that’s concerned. Geopolitically, the uncertainty surround Brexit continues. Obviously the same applies in Europe as well.
So, taking a look at the GBPUSD this morning, it looks like there’s some USD strength across the board. And I just want to highlight this area here. And this is obviously an area where you will have traders trading off these levels, going long, believing that the market will continue up. And if you just check out the market prior to this move, one of the most important things about understanding how markets end up trapping traders on the wrong side of them is the context of the market prior to the trap occurring.
So, if you have a look at this context, meaning what was the market doing prior to the trap. And if you look at the nature of these moves up, they get kind of more strong and vertical and large in nature as the price continues. And then what we have at the top edge is you then get some profit taking that forms a level of resistance as it moves forward. A little bit more resistance at the level there. But then it breaks up through the level and then traders look to trade the retracement, and that’s what they get. They get the bounce off that level.
So, interestingly, what they will do from there is they’ll place stops under there or place stops under this area here, being the most recent sort of big buildup of structure. Now, if you take that into consideration, then what we have is traders who went up long in here, believing it would follow through, they are now trapped. So, let me just clear this up. So, there’s your level there.
So, there’s a couple of things going on. Traders drawn into that breakout at those highs as well. So, breakout momentum traders went long. Retracement traders traded the pullback into prior resistance that now becomes support in their view. That’s the very typical narrative that’s spouted online and in the financial world, and then you’ve got stops under here as well. This is probably a 60 percent fib. Let me just have a look just to add insult to injury from this original move. There you go. There about. So, there you go.
And look at how it reacted as well. You’ve got a bit of a level in there as well. Sorry I missed that. A little bit of resistance. So, comes in, breaks, comes back into the 61, and then it absolutely flies from there. Just think about the context of that. That candle. Look at the wick. That candle was heading north big time and that would’ve drawn a lot of traders in. Again, very typical place for them to place their stops would’ve been below this structure or below in here, and they are being creamed.
So, not only are those breakout traders at the top being creamed. Not only are those break pullback traders being creamed. The 61 percent fib traders into a little bit of structure have also been creamed. Net-net the market is very long from last week. This looks like a pretty good place, if we get a pullback, to take a short.
This video is for general information only and is not intended to provide trading or investment advice or personal recommendations. Any information relating to past performance of an investment does not necessarily guarantee future performance. Forex Traders Daily including its analysts shall not be responsible for any loss that you incur, either directly or indirectly, arising from any investment based on any information in this video. Please remember derivatives and FX spot carries significant risks and may not be suitable for all investors. Losses can exceed your deposits.
In a shop: - Give me a roll of toilet paper. - What color would you like? - White please, I will color it myself… - Hi, John! I have heard that you died three times already! - Hmm, but you’re no better – you haven’t come to any of my funerals. Could you fax over a copy? No, I can‘t fax because of where I live. Where do you live? The 21st century. Get a life - I’ve heard they’re cheap now on eBay Thanks to Blaine Zernechel.
April fool’s day If there are hopeless fools, then there should also be fools, which give hope.
As experience shows, its easier to fool somebody on a regular day, rather than on April 1st.
Question: can a joke, played on April 1st, become a present for the New Year? Answer: yes, as theres exactly 9 months period.
Valentines Day The best thing of being my own date for Valentines Day is knowing Im guaranteed to score.
Christmas gift Dear Santa, Please do not leave my gift under the Christmas tree. Drive it straight into the garage.
Christmas tree - I left my girlfriend a Christmas gift under the Christmas tree. - Is she happy? -Not yet, still looking for it. The forest is large, lots of trees.
Funny relationship jokes - wonderful wife Single guys often dream of having a wise, beautiful and caring wife. But married guys think about it even more often.
Adult jokes - in a bus Conversation in a bus: - You know, yesterday in a bus your wife told me such a great joke that I almost fell out of the bed.
Profession jokes - executioner An interview with an executioner: - So, how long have you been working in this job? - Well, around 10 years… - And how are you doing there? - Well. no one complained so far.
Daily life jokes - Boy, do you pray before you eat? - No, why should I - my mom is a good cook.
Jokes about dating - magazine The announcement in a magazine: in the next issue we will be writing about to make your boyfriend a little nervous with the help of a marker and a pregnancy test. Daily life situations - in the cafe - Waiter, there’s a bee in my soup! - Yes sir, the fly has a day-off
Profession joke - A priest A priest tells the prayers: - We have one good news and one – bad ones. The good thing is that we have money for the repair of the church. The bad one – the money are still in your pockets.