I usually like to type my thoughts out when I’m trying to shape them which I usually in a word doc … and is a good exercise I like to do to help put all those thoughts together

Firstly ATR’s have been done, which gives me little profit potential for the day we know that the short term moves of late can still produce some good moves after ATR’s have been done but profit potential at the moment is 0 versus large gaps and wide swings… this is making me scratch my head. 2 big gaps in as many weeks also making my think twice about these markets

so I’m back to thinking about direction for any potential…

Using gbpusd onscreen as example…

Big gap up which from Friday has moved more than 500 pips. When was the last time we saw this and what happened?

As chartists we are looking for history to repeat itself.

So what did it do last time?

If you notice, I’m still going through the first 2 of the 3 basic questions only this time I’m expanding the where is price now and what is it doing part… looking for as many facts as I can and also looking at what price did last time this happened

ok so last time….

Big gap up, which was the Fanny and Freddy bail out. This pretty much amounted to a nationalisation of those financial institutions and some pundits were saying this was the equivalent of an interest rate cut. Which is good for the US, right? The bail out though is bad news… = gap up. This was seen as a shorting potential for gbpusd

So what different fundamentally this time?

LEH bail out and maybe a few others to follow… the news in UK not as bad, also a price action direction bias on the 240 min charts which we looked at last Friday.

So this time LEH bail out… bad for US and FED also considering changing views on rates… gap up on gbpusd and the trend is at the early stages of change… which is different from last time as the trend was well established as already down… is this gap going to be a shorting opportunity as well… It might be but I don’t thing so.

So facts again… This gap is different from last time and bad for US as their financial system is in melt down and the government is not bailing them out = bad

All in all while the UK is not too much better than the US the UK is not having as many problems and our banking system isn’t collapsing…. at least not just yet!

It now looks like the financial melt down we were predicating several weeks ago is happening and its the US who has buckled first, should it be good for the UK in relation to currency exchange in basic terms if the UK and US were companies and you had to invest on one of them,  which one would you invest in…? Neither, but If I had to choose right now it would be the UK.

The point is everywhere is struggling its a question of which one is doing worse and looking at gbpusd the USD is doing worse… and its not a case of GBP is better… its still in a bad shape just not as bad… for now.

They are the facts using the 3 basic questions and taking some of the fundamental picture of why this is happening into consideration

The last of the 3 questions is how can I get involved…? It takes a while sometimes but we are getting there.

This one will be easier to answer… ATR done looking for fib set ups… but which way will we be looking to trade? Intraday looks like at the time writing mixed direction and the 240 min chart is starting a new uptrend, but how long is that going to last? Long story short is that the potential for the day has been done based on an average days move. And is a step aside say for now.

Lets think about this another way… if you are playing football on the park. You have a giant square of grass to play on… and if the ball went on to the main roads with traffic going up and down would you continue to play on the main road or would you get your ball and go back into the safety of the park…?

At the moment folks we are on the main road… so lets wait for little jonny to get the price action back into the park so we can all play

Do you have any thoughts or comments? What about JPY rates as a safe haven instead of USD rates?

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