GBPUSD—approaching resistance

The short-term daily uptrend line gave support to GBPUSD and it bounced. It's not great that RSI dropped below its uptrend line but price not following is a good sign. Now the pair is approaching its August 12 high of 1.5714 and its behavior here should determine whether one would go long or short. If it begins to falter I'll short but if it looks robust (or as robust as one could expect for these August dog days of trading), a long is possible with a price objective of the 1.5998 (Aug 6th high and the .618 retracement of the drop from the July 30th high). A drop back to 1.5574 is possible though so a tight stop would be, as always, a good idea. Nearby support is 1.5663.

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.