GBPUSD—weekly

Cable has managed six days of closes over 1.60 and it looks as though the bulls are fixated on overtaking 1.6300. What can't be overlooked, however, is that it's coiling inside a triangle on the weekly chart and the lower boundary, a logical target for the next move, is 1.4619 or thereabouts. Before it got there it would find support at 1.5900, 1.5751, 1.5345, and 1.5274/64 (fib confluence) as well as the round psychological number of 1.50. Of course, an Elliott Wave afficianado would say the pair must break down from this triangle since it entered it in a downtrend but take that with a grain of salt.

The fib confluence of 1.5274/64 lends support to the idea that Cable might be settling into a trading range between 1.5297 and 1.6300. This, too, would suggest the next move would be down. Everyone has eyes on resistance of 1.6300. If price fails again in this range, selling will come into play.

If price does successfully overtake and settle above 1.6300, then 1.6461/1.6500 and 1.6878 come into play. My money is on the bears but be careful with this pair and use tight stops.

Here's a weekly chart:











© Dianne Fecteau, 2011. 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.