GBPUSD—May uptrend line held

In the drop to 1.5650 yesterday, the uptrend line from May essentially held as did the 9/30 low of 1.5670. Given all the gloom about the UK possibly doing more quantitative easing, I'm a little surprised but everyone seems to be on a rally against the buck today. The C wave of the ABC correction could still be ongoing which would cause a push to 1.6391 (.618 of the A wave). As those who follow me know, there's still that daily bull flag with a target of 1.6461. Still, the break below 1.5749 convinced a lot of traders a top has been made at 1.6107. We'll see.

A move down will find support at 1.5650, 1.5627 (a former daily speed line) and the psychological 1.55, below which is probably a return to 1.5297. If the pair continues to rally, expect resistance at 1.5879 (today's high), 1.5997 and 1.6107.

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.