Let’s begin with a short update on the ES, that I discussed last week. We are still in daily and weekly congestion. Although the market is rallying up, it will struggle to get above the Hawkeye stops on the daily chart. The critical point we have to look for is a breakout of the weekly pivot high that was established on February 27. If that weekly pivot high is taken out, then all bets are off, and we are off to the upside. But at the moment, we are having distribution volume profiles at the top of this market.

Now, I would like to look at the GBPJPY cross. Let’s begin with the Fatman indicator.

On the daily chart above, you can see I’ve placed a red arrow where the brown line (GBP) is starting to bend down.

And, if we look at the weekly chart (below), you can see that the brown line (where I have placed the arrow) is still in steep decline.

This shows us that when we get setups occurring on the timeframes of daily, weekly, and monthly, we have a low risk entry.

I’d also like to say that the fundamentals on the British pound are very bearish. We have an election coming in about four weeks in the UK, and it looks like a hung Parliament. In other words, no party will have a majority, so there will be a lot of compromise. The markets don’t like it when there is no solid government in power. So, I recommend that you really start paying attention to all the pound crosses.

On the GPBJPY daily chart, see where I have placed a red arrow, just below the last pivot low extension?

On Friday, the market closed underneath that pivot line extension. Now, because this is a daily chart, and I want to swing trade it, I want to wait until there is no part of a bar that is straddling that pivot line extension (the yellow line that goes through the price that occurred on Friday). So, we will have to wait until Tuesday for a 100% setup on this market.

If you are an aggressive trader, you may already have a short in place on the daily. However, when we come to the weekly chart, you’ll see that the danger signs occur, and you have to be cautious. Now, if you look at the second arrow on the daily chart (on the gray little dot), which shows us an aggressive entry now to the downside. So, everything is in place on the daily. However, we need to have at least one more day (Monday) to get a real confirmation and a low risk entry.

If you look at the monthly chart (which I’m not going to display), you’ll see that the trend dots are starting to roll over. Again, showing us this up move on the GPBJPY is over, and we should expect a decline.

Now, let’s look at the GPB weekly chart, and you can see I’ve placed a red arrow.

This is the danger area. Can you see that it’s coming right down and touched the Hawkeye stop (the cross)? And if you look on the cross line, you can see that it has come down to that support area seven times. So, as soon as it breaks that support (which might come this week), you have a sure fire, low risk entry to trade the GPBJPY to the downside. But, you must be cautious and wait, like a hunter waits for the perfect shot. So, you must wait for the perfect set up. I do believe we will get a perfect setup this week. So, stay alert and good fortune.

Nigel Hawkes

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[The red lines and red and blue arrows are for illustration only and do not form part of the software]