Brian Twomey
Brian's Investment
GBP/USD overall contains a big break at 1.3525 but then comes the day trade. This is where trading life becomes interesting.
A market price movement is as good as the MA and interest rate allows and its central bank created and determined.
EUR/USD for example in 2015 and 2016 traded anywhere from 75 to 80 daily pips on a 1/2 range and 150 to 160 pips for full ranges.
Presented for EUR/USD and GBP/USD is the present trade condition but situations change as interest rates adjust and adjustments happen every trade day. Today's EUR/USD and GBP/USD may or may not be tomorrow or next week's trade.
Fed Funds yesterday traded from the 1st to 99th percentile from 0.05 to 0.10 or 5 points. Tuesday Fed Funds traded 10 points from 0.06 to 0.16 and Monday 14 points from 0.06 to 0.20. As all central banks follow, trade and design interest rate systems based on the Fed then all central bank interest rates traded exactly as Fed Funds on each trade day.
What exactly traded and determined to Fed Funds daily movements is the price of money by borrow and lend rates to excess reserves. Excess reserves change daily therefore the price of money by interest rate determination must also revise daily.
Central banks price money and interest rates below exchange rates in order to force mandatory movements as designed by the 1972 currency free float system. As interest rates trade, lend and borrow through the daily trade system then forces the exchange rate to move.
Its impossible for the exchange rate not to move on any given day. GBP/USD contains 2 vital numbers: 1 and 4 or 0.0001 and 0.0004. For the week GBP/USD moved 161 pips, 0.0161. Subtract 1 and GBP/USD moved 160 pips. Subtract 4 then GBP/USD moved 158 or 0.0158.
Despite 161 pips, in interest rate terms, market prices actually moved extremely small intervals.
Fed Funds as presented for 30 years or 360 monthly averages trades at a fairly neutral position which means not overbought nor oversold and nothing exciting seen to big movements.
As interest rates share an adverse relationship to money supplies, the smart move is to determine M2 money supply overbought or oversold conditions as an insight to Fed Funds. More importantly, Futures prices trade based on Money supplies. The Futures trade strategy is short overbought money supplies and long oversold money.
The goal and commonality to central banks is not necessarily the interest rate but to maintain pace to money supplies. Fed's M2 not seasonally adjusted for December 2021 sits at 21,767.4 Vs July 2017 at 13,548.70 vs 2015 at 3140.5.
The ECB current M3 sits in billions at 13,345 vs 2014 at 10,108 billion, and 2017 at 11,581 billion. How much did central interest rate changes affect money supplies.
GBP/USD
For the week: 1.3386 to 1.3557 or 171 pips. In 37 hours of trade factors as 4.62 pips per hourly average and up from 4.19 pips in 31 hours of trade yesterday.
Long Short Line 1.3522.
Most Important 1.3472 and 1.3485 Vs 1.3531, 1.3539, 1.3547, 1.3556, 1.3573, 1.3581 and 1.3592.
Bottom 1.3454 achieves by 1.3488 and 1.3471.
Upper target 1.3592.
Continuation Fail 1.3556.
1:30 am to 2:00 am = 1.3520 to 1.3524 or 4 pips.
2:00 am to 3:00 am = 1.3522 to 1.3536 or 14 pips.
3:00 am to 4:00 am = 1.3547 to 1.3530 or 17 pips.
4:00 am to 5:00 am = 1.3526 to 1.3542 or 16 pips.
5:00 am to 6:00 am = 1.3535 to 1.3554 or 19 pips.
6:00 am to 7:00 am = 1.3550 to 1.3565 or 15 pips.
Under 5 1/2 hours of trade and 1 1/2 hours of day trades remaining, GBP/USD trades an hourly average of 14 pips, 20 pips yesterday and 18 pips Monday. As mentioned Monday from 20, hourly average would severely drop. It dropped.
GBP/USD strategy today is short.
Trading currencies and other financial instruments carries a degree of loss and possible loss of entire investments. Please managed your own risks, stop loss, and margins requirements.
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