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Bonus GBP/USD Trade: Sell at 1.5625

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

Last updated 2/24/2010 7:28 PM EST (GMT -5) 6 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

A shorter term bearish Gartley pattern is forming on the GBP/USD 2hr Chart.  For the uninitiated, this may seem odd because we are currently long the GBP/USD on a longer term pattern.  Bear with me, I will address your concerns in a moment.  The bearish Gartley on the 2hr Chart has very nice symmetry, although it has a long was to go up to D.  The trade would also enter at the bearish trend line on the 8hr Chart.

Please notice that this does not change a single thing about the GBP/USD long trade.  This entire shorter term short trade (sell, stop, and profit target) are contained within the space between the entry and profit target on the longer term long trade.  In other words, they do not impact each other as much as you might think.  If you enter this short trade, it will exit one way or another before impacting the long trade.  For those of you still confused, this is a good exercise for you in the mental flexability that trading requires. 

We are looking the sell the GBP/USD if it rises to 1.5625 (Point D).  Point D is located at the convergence of the following points:

We will now go over what to watch for assuming the pair continues rising towards our entry at 1.5625.  First, we need to watch how quickly CD completes.  We are looking for the CD leg to rise slowly and enter the trade near where we have drawn the hypothetical entry.  If there are long bars near the completion of the CD leg, we will not take the trade.  Also, if the pair comes within 15 pips of reaching our entry, does not enter, and reaches 1.5524 before entering, the trade is invalid.  The trade is also invalid if the pair falls below 1.5370 before hitting our entry.

To recap, we will look to sell the GBP/USD at 1.5625 with our stop placed at 1.5679.  Our initial profit target is 1.5546 (38.2% of CD).

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  • 8hr Chart - Trade would enter near the bearish trend line.
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  • 2hr Chart - Bearish Gartley; sell at 1.5625.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

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Comments (6)

maccivtjv

February 25, 2010 at 10:46 AM ET

Hi, Brad. After this morning downfall of GBP/USD is yet possible to the GBP recover all the loss over the greenback?

bgareiss

February 25, 2010 at 01:28 PM ET

Once I enter a solid setup like this one, I just let the trade run its course. It is probably more likely the trade will stop out at this point, but I have also seen trades come within one pip of stopping out before reversing all the way to the profit target. Sitting tight is usually the way to go if you have planned out your trades ahead of time. Brad

ARaj

February 25, 2010 at 11:48 AM ET

Hi Brad,

I'm in the trade (long GBP/USD @ 1.5410), but I'm really confused by the analysis seen in fx360.com. Need some clarification please.

Your long term trade says to go long at 1.5410 with profit target at 1.57. But the above article says sell opportunity that's much earlier than 1.57 (1.5625 to be exact). On the home page, in technical analysis report, I see this for GBP/USD

Room down to 1.52 off failed daily butterfly (room down to 1.50-1.4950 later this week)

So don't know what direction to take. Should I get out of my current trade and take the loss because the short term outlook says that my stop will be hit this week. Please share your thoughts.

Thanks
AR

bgareiss

February 25, 2010 at 01:32 PM ET

The short trade on this article is invalidated because we never reached the entry. Roger and I write different articles, and we will have different opinions at times. I am letting the trade run its course because it has not been stopped out yet. You are free to do what you like, but I don't see much to be gained by exiting just above the stop. Brad

CSUNsManny

February 25, 2010 at 07:03 PM ET

Mr. Gareiss,

Interesting analysis! Based on what I have learned about supply/demand and experimented with it seems likely to me that GU will sell-off again at 1.5535 stop-loss 1.5585. What do you think?

--
Manny

bgareiss

February 25, 2010 at 07:39 PM ET

I have my long term long trade in, which can be viewed here: http://www.fx360.com/techAnalysis/Index.aspx?tab=gbpusd. I am not sure what the pair will do next, however. As far as trading according to supply and demand, I would be pretty interested to know how you came up with such exact numbers. Supply and demand works great in some areas (mainly my old college econ classes), but there are a lot of additional variables in trading. Brad

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