GBPUSD – A Closer Look by GoLearn Forex
GBP/USD:
Range bound trading continues. It is especially obvious when MA is moving horizontal. Notice on the daily Cable chart below that the 50 SMA has been horizontal since late July while the 100 SMA turned horizontal in late September. The 100 SMA is above 50 SMA which is typical of a falling price environment. Additionally, the last time a complete candle appeared below the 50 SMA price fell an additional 4.54%.
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If you have been trading support and resistance then you have been very successful recently. The yellow rectangular area indicates upper level resistance. Those who trade pure reversals would look to make short entries there.
Point “A” defined our first high in the range. We make Point “A” the first level of resistance, R1. Points “B” & “C”encroach but never breach R1. These would become Reversal Trades 1 & 2. Point “D” breaches R1 before retracing. Points “E”, “F” and “G” look similar to “A”, “B”, and “C”. Point “H” breaks resistance before retracing its gains.
For Points “B, C, E, F, and G” if you were trading straight S&R you would have fared very nicely. However, for Points “D & H” indicated by the red arches you would have mostly likely been stopped out before picking up the reversal.
With proper risk controls traders will minimize their max loss on every position. A forex trader cannot expect to win on every trade so choosing the best trades and entry points is essential. With the use of Candle patterns, Momentum indicators and Oscillators a trader can time the entry where the lull in momentum begins (blue vertical lines) which may signal a reversal. The Chart below uses the MACD with a histogram to demonstrate falling momentum. The histogram more clearly reveals the convergence of the MACD with the Average. If you wait for 3 full bars with lower highs (red arrows) to form and ensure that price is still at the point of resistance you can avoid tripping a stop loss and possibly end up in another winning forex trade.
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Closing in on Official Shopping Season by GoLearn Forex
The DJIA was flat Friday closing the day down just 14.28 points. The week saw the DJIA gain 9/10th of a percent while most Global Equity Markets finished the week in negative territory. The Greenback gained as risk was held in check as the DXY closed above 75.57 in the forex market, for the first time since November 12th.
The Kiwi was the big loser, giving up 3.2% and the cable gave up 1.84% after breaking through near term resistance. The week was marked by global concern over whether the market can sustain their phenomenal 62% gain since the DJIA hit its March lows. Adding to investors worries will be the lack of liquidity in the market through the remainder of the year.
Monday and Tuesday maybe volatile in the Forex Markets as the U.S has Holiday on Thursday. Typically and the preceding Wednesday and following Friday are marked by very light volume days. Friday kicks off the official Holiday shopping season. On the economic data front Canadian Retail Sales are set to print on Monday and PMI in the EUR zone is due out as well. U.S Existing Home Sales will print tomorrow and expect that traders will be watching this closely in light of the poorer than expected new home data that came out last week. A print below expectations should pull even more risk off the table and we would expect the Dollar to strengthen.
Upcoming Forex Events for November 23, 2009
EUR ECB President Trichet Speaks
CAD Core Retail Sales (MoM) Forecast 0.40% Previous 0.50%
CAD Retail Sales (MoM) Forecast 0.60% Previous 0.80%
USD Existing Home Sales Forecast 5.70M Previous 5.57M
Analysis by http://www.golearnforex.net
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