EURGBP—good bounce off support

Friday I shorted at .8675. That trade stopped out at breakeven. However, the pair found support in the low .86 region over the last few days. Its prior low in January was .8603; its low yesterday was .8604. I bought it at .8622 yesterday morning and just took partial profits at +50 pips.

EURGBP is currently offered at .8673 and it's confronting significant resistance. As I wrote last week, .8700 was a tough resistance price for the pair for much of the summer of 2009. In Jan. of this year, the pair dipped to .8603 and then hovered at support of .8660 or so for much of that period. It's also back at the lower boundary of the coiling formation it fell from last week. If I wasn't in a profitable long I'd short here because of the opportunity for a tight stop and because of Euro weakness.

On the other hand, a hammer formed on yesterday's daily candle so the low should serve as support. The two prior daily candles had lows of .8616 and .8608 so it looks as though it has tried to hammer out a bottom. Certainly if it goes below that price of .8603, lower targets will be achievable such as .8500, .8456 and .8400. Resistance is at .8698, .8719, .8839, .8865, .9026 and .9130/50.

Here's the daily 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.