First thing this morning at the London open I managed to catch cable breaking the 1.50 barrier. The trade it’s self is fairytale textbook, price breaks, price retraces to previous resistance, price moves higher, trader lives happily ever after. Had a very tight stop of 10pips because of the possibility of a false break at this level, a rinse and wash as the city boys call it, but no it got a clean breakaway.
At this point I’ve taken 50% of the trade out of the second lot at +80pips, (the first lot cashed in for 17pips to cover SL) and SL moved to breakeven. I want to hang on to this trade for a while longer as there may be a possibility of a trend reversal off of this double bottom shown below.
The vertical purple line is the start of 2010 and the thick horizontal purple line is the high we saw back in January of 1.6450, since then it’s been pretty much all down hill from there with cable scraping a low out at 1.4795, that’s over 1600 points in 40 days (counting everyday), which is an average of 40pips a day……. nice.
But now there’s a DB in a large consolidation pattern that might lead to a change in direction for the Pound with a move higher, or price may continue ranging as before. These are the possibilities but I have no idea which one will be the future, as a technical retail forex trader I will be looking to trade whatever is on my charts and leaving prediction to those who like predicting.
George Richards is our guest analyst and runs his own blog found at forexdawn2010.blogspot.com
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