The 2016 fibs are in question as GBPUSD heads south
We’ve got one of those tricky technical situations in GBPUSD. With this move under 1.30, eyes are on some of the longer term fibs in play. Here’s the problem. We have the Oct 2016 flash crash low to consider but it varies between different brokers.
The low on this chart is 1.1451 but I have brokers with lows at 1.1886 and 1.1976. Reuters has a low at 1.1491. That makes plotting the fib for the swing up very difficult because who do we believe?
I’ve taken the next best option which is to forget that Oct low (1) and work my fib from the next best low, which was in Jan 2017 (2).
That next low is pretty much cemented across all the FX world so that means we can rely on it.
Overall, there’s still a lot of confusion in these fibs and as traders, we don’t like confusion, we like nice and clean tech.
So, what do we do?
We use the fibs (wherever we place them) as a means to define our risk, so it doesn’t matter where we place them as long as we use them the same way every time. Of course, we want the fibs to be as uniformed as possible with the rest of the trading world so if there is some confusion, then we need to adjust our reliance on them accordingly. In this case, I’m really not keen to trade the 61.8 fib above but will watch it just for the price action. It’s sitting on the 1.2900 level and that might be more of a factor than the fib itself. In terms of the moves we’re seeing, the 1.2770/80 area looks a lot more defined and useable as a tech level, so that will be my main focus. from here.
In the shorter-term, the 1.3000 level has now held as resistance and that will grow larger the longer we stay below. AS I type we’ve just legged lower to a new low at 1.2939 so that brings the 1.2900 levelk closer into play.