like Bobmanic says, the overall trend is still down. the price is spending much time to achieve the poin near 1,2750, when downtrend was forming.
the channel you have painted means that the market is now taking a rest. the impulses are fast and strongs, but retracements are slower and sometimes, describes figures like this channel, triangles or flags.
while the price is still between the two white lines, I would do nothing. And when it breaks the figure, I would prefer if it breaks it downwards, in the way to continue the previous downtrend. But it would have to break the last higher low too, to confirm the continuation of that.
I like to look for more than 1 S/R level in the same area, like a pivot & a trend line or fib or MA to line up in confluence. Also I don’t tend to see exact lines/levels, they can vary. Also I see your red line as the middle of the channel which looks like it could be a bearish flag formation… Just my 2 pips 
I like these rules. Please post more.
rules about S/R?
one main ‘rule’ is that an S/R line is not a definite price. it usually is a price range of a few pips to plenty more pips
Donsls, may I suggest another way of looking at your GBPUSD chart. Price fell dramatically throughout May 2012. After such a dramatic fall a period of consolidation is very likely and this is exactly what happened as I have shown by the grey box on the attached chart. The way I traded this was to wait for a break out in either direction from the grey box. In the event price broke out on the long side at the end of August. On 5th Sept a break of the high fractal at candle D then offered a good entry point. I took my profit on the break of the down fractal formed on 20th Sept. There are other ways of entering and exiting that would have given a bit more profit but I would suggest this was a safe way to trade for a newbie.
Donsls, may I suggest another way of looking at your EURUSD chart. Wave A-D was a classic Gartley Pattern, which is described elsewhere on BabyPips. I entered long a 1.2334 although the entry I show on the attached chart is safer for newbies. I always take profit at the 78.6% retracement of Gartley wave A-D.
This is great info, I’ll definitely apply some of these ideas next time I’m looking at charts.
With regard to Gartley patterns, how often do you see them? Do they appear more on some timeframes over others?
I like that you can plot exactly where to take profit using this system, is it the only one you use or do you use others too?
Thanks
Like any pattern they appear on all time frames but are more reliable on higher time frames. My main interest is in daily charts where they don’t appear that often. Here’s one more example that occurred earlier this year on USDCHF. May I suggest you go and look for them yourself on historic charts so you learn to spot them when they reappear in the future.
They look good to me!