GBPUSD—approaching resistance

On Saturday, I prepared the three-hour chart below to assist my analysis and potentially guide my trading for the week. My long had been taken out and I wanted to know if it was worth getting back in. One of the things the chart showed was an inverted head and shoulder (H&S) pattern with a potential price target of 1.6421. This, along with other analysis, gave me the reasons I needed to enter at 1.6276 yesterday. Cable moved up. This morning the high of 1.6400, allowing me to take partial profits.

Now, it's approaching resistance. The top of the channel is 1.6433. The profit target from the H&S was 1.6421. The current price is also parity. In addition, it's possible the pair is in a corrective move on longer-term charts (weekly and monthly) with targets up to 1.6465. If one isn't long, this isn't the time to jump in. Wait for a pullback. If the pair should scale this strong resistance, then potential price targets are 1.6500, 1.6556, 1.6600 and 1.6638.

Every individual trader should be doing some analysis on the weekend when the market is closed and there are no distractions. I prepared three or four different charts for Cable. Here's the one that indicates the H&S pattern:










© 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.