Big Move in GBPUSD: Price & Structure in Harmony
Figure 1
Figure 2On the daily GBPUSD chart in Figure 2 the short term trend was higher as of last Wed’s close 5-27-10. We had price giving us a change-of-direction, confirmed by a trendline break, and supported by the technical indicators. By Friday’s close our oscillators were telling us momentum had already shifted higher. This info isn’t actionable from a position trader’s perspective however because the weekly trend is still lower. For a swing trader though it can be valuable info. Go back to Figure 1, and you can see why the idea of placing a bid just ahead of that Weekly Central Pivot is worth the risk. With the daily trend already higher, buying a dip, on a confluence of support, with a reasonable stop loss order in-place turns out to have been a good idea. This is a good example of price – trend – being in harmony with structure – support & resistance.
I can tell you from experience that by being patient and understanding what defines direction, you are going to start to improve your trade selection, which should equate to less losing trades.
Jay Norris is the author of Mastering the Currency Market, McGraw-Hill, 2009, and a trading instructor at Trading-U.com. To sign up for free memebrship at Trading-U.com and hear of upcoming educational initiatives go to: Registration
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.
This is what is call smart analysis and excellent foresight together with prudent risk management.
Thanks for sharing this Jay…