GBPUSD—choppy

My long from 1.5078 was stopped at breakeven. I went long again this morning at 1.5039 after the pair tested 1.5012 with two probes of that price on the 15-minute chart. Since it fell back to 1.5018 yesterday before rising, one could look to see if that repeats today. I've already moved my stop to breakeven. This doesn't give the trade a lot of breathing room but there's risk it will correct back to the 1.4950/80 area. While yesterday's high and low were higher than Friday's, today's dip nudged a bit below yesterday's low. The bottom line here is that while I'm long the pair, I'm not particularly bullish, probably because the move looks corrective on the daily chart. Nonetheless, higher highs and higher lows suggest being long rather than short. I also like the way RSI is behaving on the shorter term charts.

Should the pair break through 1.5129/50 (which would end this chop), the next resistance is 1.5225. If you look at the daily chart below you see an ABC correction with the pair currently in the C wave. If C is 1.618 the length of A, then that targets 1.5222. In an Elliott Wave zigzag correction, the B wave is typically 50 to 78% of A. B retraced 78%. After that, there's a resistance zone at 1.5322/75 made up of daily and weekly downtrend lines along with Fib confluence zones. Above that is the psychological 1.5500.

Support is 1.5012 which really needs to hold if there is going to be confidence that the pair will continue its rally. There's strong support at 1.4980/50 and 1.4857.

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.