Hello guys,
Happy New Year to everyone!
I’m sorry for not writing for so long, but work has been very hectic the past few weeks, plus I’ve been spending a lot of time optimizing my system for better results.
Let’s see what GBP/USD is up to.
Price consolidation from the high of .9846 took us as far as .9750, it tried testing it a couple of times producing two candle stick stars, all and all you should know that dojis and stars around major R and S are good reversal indicators, so on its own just with that you should start becoming weary.
Now as I mentioned before, one confirmatory factor is not enough to let me trade enter a trade, so we need to look for more evidence and lets see what we can find…
- Dojis / Stars at .9750 (Price consolidation high from .9846)
- We see a 5/10 cross around the .9730 area (H1)
- PAR SAR confirm the down move
- RSI is below 50
- MACD is below 0
- Stochastics are looking fresh
- Trend line was clearly broken (the white ray)
As you can see we have a lot of factors and as in any strong move, the white 5 ema cuts right through the other emas like a hot knife through butter, these are all very good signals.
So what are our targets here ?
- First major Support at .9632
- Second major Support at .9565
- Third major Support at .9450
- If we break .9450 then it’s a whole new bearish world down there, much of which we can discuss later should such a scenario be confirmed
Talking about scenarios once more we try and avoid becoming surprised so we assume there are more than one scenes available.
- Is what we just talked about up there.
- Price bounces of .9632 (S1) and retests .9750
I very much doubt scenario 2 due to the strength of this move, plus look at the emas we don’t even have a clear spread yet, which leads me to believe there is more to come on the downside.
You will notice I’ve made a few additions and changes to my charts.
-I’ve added a few more emas. I now have 5,10,20,30,40,50. I added 30 and 40 not so much because I need them, but more of a visual aid.
-You will notice I’ve added horizontal lines at each 50 pips. The reason I’ve done this is because my experience tells me the price always moves 50 pips, as long as you can determine the move direction and catch the break out you will always be able to bag the 50 minus the breakout pips, so lets say at least 40. It’s strange but it works, in fact even if you scrapped all TA and just determined the trend direction and bough and sold at each 50, you bag at least 30-50 pips. Another factor here is that every 50 is almost always a significant support and resistance level.
-I am testing RSI levels of 7 and 9 at the moment, 7 seems to give me very good flexibility in catching tops and bottoms for the moment.
Anyway. From what I can see now as I’m writing this is that the price is correcting of S1 .9632. I think that .9650 or .9660 (10 EMA on M30) will handle the price after which we can aim to follow the bearish scenario.
Now as I’ve said before. We do our TA the best we can, we enter our trade and then we monitor to see if we were right or wrong, there is always only two outcomes here.
Minimize your Stop Loss value every time you can and the more the trade advances in your direction.
Preferably move your stop loss to your entry so you don’t loose anything even if the trade goes against you.
That’s it guys, I’ve already bagged my 50 pipos for today.
I will wait for the retrace and eventual break of S1 before I enter short again, in which case I will be targeting .9565
Regards,
E. Lang
PS: I use Exponential EMAs calculated at the Closing price.
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