Thursday, September 2, 2010

GBPUSD—possible rally

I think there's a chance for another leg up and bought at 1.5358. In case I'm wrong I've already moved the stop to breakeven and took part of the position off the table for +40 pips.

Cable slightly dipped below last week's hammer low of 1.5371. That's bearish. However it's not much below (50 pips to 1.5326) and that's.382 of the 1.4228 to 1.5998 move. The fact that this held as support was positive. There's also support beneath here in the form of Fib confluence zones.

I wrote on Aug. 30th about the monthly symmetrical triangle with a potential of 1.6346 if it ran back up to the top. You could also look at the monthly action as having completed A and B of an ABC correction with C underway. On the daily chart, there's a bull pennant with a potential 672 pips from the breakout point (1.6164). All that's lovely to behold if price moves up but before one starts filling out deposit slips there is significant resistance in the 1.54 to 1.55 range with 10-, 50-, and 200-day SMAs ranging from 1.5428 to 1.5467. The top of the bull pennant is at 1.5480 and 1.5492 was yesterday's high. 1.5598 is the August 26th high.

The sentiment is largely bearish and the pair did break below its daily uptrend line as did RSI.

We'll have to see what happens. The markets are pretty dull. Fundamental data is sending mixed messages and NFP is coming out tomorrow. There probably won't be a lot of action.

Here's a 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.

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