GBPUSD—did you see that?

I took a short position this morning in this pair at 1.4938, not expecting much because it was already down. Wham! I almost immediately hit the profit target at 1.4868 for +70 pips. The pair dropped from 1.4972 to 1.4785 in three minutes! That's 187 pips and is as clear a lesson as is needed to anyone who doesn't set stops. The pair dropped from 1.5184 to the low in three hours. Pretty good hourly pay if you were short from that point. It then regained 126 pips in less than a half-hour. If this is the way price action is going to be today one should either 1) get out the deposit slips if you're on the right side of the market, or 2) take the day off. I've shorted at 1.4878 but with a very tight stop.

Resistance is at 1.4911 (it's fallen off a bit from there), 1.4977, 1.5000, and 1.5184. Support is at 1.4785 which is the low today as well as just above the long-term, daily uptrend line. Further support lies at 1.4700, 1.4600, and 1.4517.

Here's the one-hour chart:























© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.