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Forex: Ideas You Can Trade - GBPCHF short term bearish momentum developing

Posted by Steven Hatzakis on Aug 19, 2013 2:54:00 PM

GBPCHF:  Short term bullish support line failing in current session

The daily candle chart below shows GBPCHF following a short term bullish support line (point 5 on chart) which has failed to hold prices in the current session. After breaking above a medium term bearish channel (point 1) and a long term bearish resistance line (point 4) early last week the pair followed up this short term bullish support line (point 5) and is trading currently near 1.4455 (as of publication).

Although the momentum is still mostly bullish - in the very short term -the failure of the current bullish support line (point 5) may allow a continuation under a short term bearish resistance line (such as point 3) which if developed could target the upper resistance line of the medium term bearish channel (point 1) or long term bearish line (point 4).

Support may also be found below current prices on a intersecting medium term bullish support line (point 6) which appears to have been the catalyst for the upside breakout of the long term bearish resistance line (point 4) early last week (as both lines converged into a triangle formation). 

If the short term bullish support line (point 5) can be regained then the pair may target 1.4600 with further static resistance near 1.4700 and 1.4800 in the very short term.

The bearish trend and several continuations were discussed in a previous article in mid July 2013:


 Below are examples of how to trade a bullish continuation or a bearish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4485 with a Limit to take profit @ 1.4580  and a stop-loss @ 1.4426 Risk/Reward Summary: Limit risk = +95  pips profit / (-59 ) Stop-loss risk = Gain to Loss ratio =  1.61

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4413 with a Limit to take profit @ 1.4363 and a stop-loss @ 1.4456 Risk/Reward Summary:   Limit risk = +50 pips profit / (-43 ) Stop-loss risk = Gain to Loss Ratio = 1.16

 

gbpchfdaily august 19 2013 note
 

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