More ideas to come next week, and an announcement -- this blog is moving to FXStreet.com and it's going to be updated with S/R trades on a daily basis. I know this brings an unimaginable amount of excitement to you.
The GBP/USD is hitting a longer-term level of resistance. Do you see on the 4 hour chart below (click on it for a larger version), how the pair broke and closed above the blue trendline (at the blue square)? And then fell back at the red square, and produced what I call a Winnipeg entry?
That entry came when the pair fell back to the same line that it had broken out from. That pullback, or Winnipeg, move, is for me the real start of the breakout. It just wants to go back home one more time before it heads up.
It headed up to the red dashed resistance level (which is based on historical support and resistance). Then it fell and hit the blue trendline all over again. Now it's hitting the red dashed S/R line all over again. It it can print a reversal candle (a doji, a pregnant fairy, a morning breakfast star, an evening angry boss, that kind of thing) then I am going to sell the pair and hold on for a pullback to 1.9900, then move the stop to breakeven.
Then the profit target will be 1.9850, which is the approximate high of the candle that broke above the blue trendline in the first place. The stop loss will be 1.9975, which is above the high from the last time it hit (and barely went above) the resistance area.
The pink trendline is our profit target -- remember that the line-chart might not show a touch of this line, but the candles or bars will (I'll keep you updated on that). If you missed the trade, a break of the dashed green trendline is a second chance entry.
