GBPUSD—coiling

There is quite a bit of downward pressure on this pair but, as with many of the pairs, there is also indecision about which way to go. The safest selling point in my mind is 1.5509/26 if it can get up there; the best buying price zone is 1.5289/95.

That said, I went short this morning at 1.5478 which is shy of 1.5526 by 48 pips. That didn't leave a lot of room for a tight stop so you might ask why I did so.The reasons are 1) the downside pressure, 2) on the 30-minute chart the pair was coiling inside a triangle and I thought I could pop out 30 or 40 pips from the trade before it went into a do-nothing, Monday mode, and 3) it looked like it was going into an ABC correction with legs A and B complete so C would have been down. In addition, there is negative divergence with RSI on the 30-minute chart. All good reasons, right? Haha. While my stop is already at breakeven it looks as though the pair is going into do-nothing Monday mode. Well, at least I can't lose money. Should it get down to the bottom of the triangle I may reverse but it will depend on really short-term price action and momentum.

Resistance is at 1.5509, 1.5526, and 1.5708. Support is at 1.5441, 1.5427/17, 1.5374, 1.5296, 1.5130, 1.4971 and 1.4798.

Here's the 30-minute 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.