Wednesday, March 9, 2011

GBPUSD—key support at 1.5963

After cable's March 2 high of 1.6344, the pair closed yesterday at 1.6159, below the 10- and 20-SMAs. This is the fourth, daily, lower close and the third day of lower highs. The high met long-term trend line resistance and was near the target for a monthly C wave at 1.6324. That, though, is if C is equal to .618 of the A wave so it is possible the pair is gearing up for another push upwards. I'm long from 1.6162.

A look at the weekly chart below shows that cable in the middle of an upward sloping rectangle. It is near a weekly resistance line at 1.6367 but if it can manage to push above this then it should be able to reach the top of the rectangle. The weekly ABC correction could have C ending at 1.6465 if C equals wave A (1.6192 was .618 of A).

As of now, the pair is well above key support. 1.5963 is the first key support level. This is .382 retracement of the entire move from 1.5345 and is the Feb. 11 low. Below 1.5751/25 would be very bearish as it would violate a long-term daily trend line and a prior low as well as be the .618 retracement from the move up from 1.5345.

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.

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