Signal for GBP/USD

Posted on 09. Apr, 2009 by Jakob in Uncategorized

Alright people. I will start posting some Forex signals, when I am considering to enter a position. This will be based on different strategies, and most often in a combination of technical and fundamental analysis. However, as I have not really been paying attention to the news today, and I am off on vacation tomorrow, I have not spent any time focusing on upcoming news. So this trade is solely based on a technical analysis. And a rather simple one, I might add. Anyway, I think is has some good potential, if it is played right. Taking a look at the chart below you will see that the GBP/USD pair has been in a range in the last period. This is a 4 hour time frame, and the two red lines seem to line up as pretty good support and resistance lines. At the top we have 1.4779 and the buttom is 1.4581. The pair is currently at 1.4670.

I will and cannot tell if the break will be to the up or downside, but I will break one of them eventually. You can either go in direct, at a break of say maybe 10 pips, and hope for it to keep going in your direction. The way I would like it to play out is to see a break and close on the one hour time frame above or below any of the two lines, and if it has a distance of close to 10 pips from the support or resistance line, I would enter. If it breaks the line and keeps going so the one hour candle closes far away, I would wait for retracement back to the support or resistance line, and then enter. A good stop loss would be a few pips above or below the opposite line. Say you go short 10 pips below support, the stop loss would be 10 pips above resistance. This way you are secured if the break is a fake out. If you enter on a retracement, I would probably use a smaller stop loss, specially if the pair is slowing down when coming closer to the support or resistance line. I think this can be set up with a good risk/reward ratio. Look for an earlier high or low, in order to determine your take profit.

I actually decided I didn’t want to write any more tonight, as I am leaving for holiday tomorrow. So this did go a bit fast. I hope it makes sense. Otherwise drop me a note, and I will work on it :) I don’t know if I will write any new posts before leaving, but otherwise I will be back on track Monday.

Related posts:

1. Update on the GBP/USD signal
2. Profit Mongers – Monday Trading Signal 12-13-2010
3. Possible entry on GBP/JPY
4. Forex Signal # 1 – Trade Setup EUR/USD
5. Profit Mongers – Wednesday Trading Signal 3-24-2010

Tags: forex signal, gbp/usd