Long Term Setup Gbp/Usd – 23rd Sep 09
The Gbp/Usd pair is showing a pattern of high probability. We see a possible head and shoulder pattern which is yet to be completely formed. The left shoulder started on 29th of May, with a repeat bounce off at 8th of June and this rallied on till the 6th of August, where its recent highest high as formed. This will now be the head formation for our pattern referential in context.
Right shoulder formation to break neckline
The last part of this formation to complete the pattern is the final lap which will need the right shoulder to form. The right shoulder has taken a bounce off the last support/neckline level, at just about 1.6200, which is also a very strong psychological level. This formation completed on the 21st of September, 2 days ago. We now have a distant gap of about 160 pips on the upside.
We need gbp/usd to head south and break our neckline level before this pattern can be complete and we can take this trade setup. I have 2 levels of sell orders based on this trade setup. Once the next 38.2 fib level breaks, along with the 1.63 psych level, i will take a sell order at 1.6280.
Beyond this, which is what i am further interested in, the neckline and 23.6 fib level converges around the 1.62-6220 area. If this breaks, our pattern will be complete and we can have a long term trade setup. I have tentatively placed this order at 1.6145. If this takes place, we will have at least about 800-1,000 pips profits.
On the flipside, the US dollar has been taking a beating and we see continued USD weakness. Therefore, this trade might not even take shape. However. Gbp/Usd has also been showing significant signs of slowing down. So this trade might break out either way, but in my opinion, heavily poised for the downside.
Therefore, do not rush into the trade and ensure that the necessary levels/conditions are watched and then place your trade.
As always. do not over-leverage and play it safe.
Happy Trading,
Seeni
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Seeni J G
gbp/usd neckline broken at about 10pm SG time, both orders filled at 1.6280 and 1.6145, now at +244 pips and +109 pips respectively.
http://singaporeforexblog.com/forex/long-term-setup-gbpusd-23rd-sep-09
[...] I was specifically watching the Gbp/Usd pair as i had pre-determined that this is the pair i was going to trade because; a) Gbp was heavily overbought(much like the rest of the majors) and b) I had a long term trade setup bias as posted here [...]