GBPUSD—under pressure

Things look dire indeed for this pair's little rally. I did go long yesterday at 1.4825 because GBPUSD had dropped to its uptrend line from early 2009 and was also near the March 1st low of 1.4785. I just took some partial profits at +48 pips since it seems to be having trouble getting above 1.4886.

There is positive divergence on the three-hour chart and the pound has been pounded lately. Any kind of rally at all should be able to get it to a .382 retracement from the March 17th high of 1.5382 to the 1.4798 low but maybe not. In any case, I've moved my stop to slightly better than breakeven. If it can get up there, or even better 1.5090, then a short would most likely be the way to go. If it's going to drop further, it has quite a few layers of near term support to muddle through. However, if it clears below 1.4704, it could be headed for 1.4533 and 1.4397. You'd definitely want to be short before then.

Support is at 1.4829, 1.4798, 1.4785 (strong), 1.4772, 1.4754 (strong), 1.4704, 1.4533, 1.4437, and 1.4397. Resistance is at 1.4886, 1.4943/61, 1.4978, 1.5021, 1.5055/63, and 1.5090. If it somehow surpasses 1.5090 it would probably try for 1.5376/82 but let's stay grounded in the current reality.

Here's the three-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.