What happened to the GBPUSD in the first 6 months of 2013?

What happened to the GBPUSD in the first 6 months of 2013?

What happened to the GBPUSD in the first 6 months of 2013? I like to look back at trading ranges, patterns and statistics at a macro level at least twice each year. In this article I am reporting on what I found during the first half of 2013.

For me at least, the last 6 months have been far from my best trading months. The period felt, and continues to feel, volatile and unpredictable. However, what do the figures tell us?

GBPUSD 6 months to end June 2013

GBPUSD 1st Jan – 28th June 2013

Above is a one day chart of the GBPUSD for the first 6 months of 2013. The chart shows my usual set up in terms of tools. There are Bollinger Bands, a trading envelope (blue and red lines), pivot point lines and volumes. The shaded pink and green areas are sell only and buy only areas respectively but more about these later.

The period started with a sharp and sustained downward run of 58 days, the longest I have seen in my trading history. Since bottoming out in March we have seen a very volatile upward trend which, despite this week’s lows, we are still in. However, let’s look more closely:

What happened to the GBPUSD in the first 6 months of 2013? – Range

So, what happened to the GBPUSD in the first 6 months of 2013? Firstly the period consisted of 128 trading days – it felt like more! When the period started the GBPUSD was at a high. In fact, the highest trading point of 2013 so far occurred on the 1st January when the pair briefly reached a price of 1.63813. This was the highest trading price since August 2012.

The lowest price of the GBPUSD, in the last 6 months, was 1.48305 which occurred on the 12th March. This was 15.508 cents below that starting high point which was a fall of 9.46%. Yes, the GBP lost almost 10% of its value in a period of about 10 weeks – no wonder things felt a little rough out there! The average price over the last 6 months has been 1.56059 so we are ending the half year at well below the average price.

The average daily range for the last 6 months was 1.14 cents.

71 days (55%) saw upward movement of 0.50 cents or less. Similarly, 65 days (50%) saw downward movement of 0.50 cents or less – so many of these obviously occurred on the same day.

111 days (87%) saw upward movements of up to 1.0 cent and 94 days (73%) saw downward movement of 1.0 cents or less.

126 days (98%) of days saw upward movement of 1.75 cents or less and 118 days (92%) saw downward movements of 1.75 cents or less.

Since we have had more downward movement than up these figures tell us that the big downward movements tended to be sharp – thank you Ben Bernanke!

The largest single movement on any one day was however upward and it was 2.78 cents. The largest range on any one day was 3.03 cents, unheard of in my experience. This occurred on the 6th June.

What happened to the GBPUSD in the first 6 months of 2013? – Up’s and down’s

Remarkably, the number of days on which the GBPUSD price ended up higher and the number of days when it went down are very close with 62 up days and 66 down days. Of course, as the price fell overall in the 6 month period, it felt like the down days would have seen much bigger falls than the up days saw rises. This is however not the case. To put some numbers on this, the average fall below the opening price for each day (that is for all days whether they ended up being up or down overall) was 0.60 cents compared to the average rise above opening on all days of 0.54 cents. The average change from open to close across all days in the half year was just 0.08 cents!

What does this tell us? It tells us that we must have seen a lot of days with big movements up and down on the same day that often almost cancelled themselves out with a bias towards a downward movement overall. That is exactly how it has felt to me too, lots of movement up and down on most days. Lately we have seen lots of days during which the price moved in one direction before the US markets opened and then in the opposite direction after the US opened.

What happened to the GBPUSD in the first 6 months of 2013? – Direction reversals

Another set of figures that I look at is the number of days of consecutive movement in an upward or downward direction that occur. Interestingly, the longest run of both up and down days that we have seen in the last 6 months is 7 in both cases.

Most “runs” lasted just 1 day. There were 20 single up days and 22 single down days so 42 days (33%) out of 128 days saw next day reversals in price direction.

Runs of 2 and 3 days before reversals were the next most common occurrences with 25 days (20%) of days seeing price direction reversals after 2 or 3 days. These were pretty evenly split with 14 for the up days and 11 for the down days.

There were no up runs of 4, 5 or 6 days and a single run of 7 upward movement days in June completes the set for up days.

There were downward runs on just two occasions of 4 days and on just 1 occasion each for 5 and 6 days. Once again there was only one downward run of 7 days to again complete the set.

So, we had a lot of very short runs and price direction reversals. To me that would suggest that the period was actually very forgiving for trades placed that had an ill-judged price direction behind them. Once more I don’t think it felt like that in the heat of battle!

What happened to the GBPUSD in the first 6 months of 2013? – Buy days and sell days.

Anyone who follows my trading knows that I have buy days, sell days and buy and sell days and that these are indicated by my rule of thirds. Basically, I divide the screen into three areas. A top third in which ALL sell trades have made money, a bottom third in which ALL sell trades have made money and a middle third in which ALL trades have made money. I have a separate blog article on this if you want to read up on it further.

So, the success of this “system” continues. All buys made in the “buy area” this year went into profit and all sell trades made in the “sell area” also went into profit. As we speak there are trades in the “buy and sell” area that are open still and in loss but that in time should go into profit.

About The Author

Jeff Fitzpatrick

Probably the UK's most successful home Forex trader