Monday January 18, 2010 - 16:18:50 GMT
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Daily Technical Update GBP/USD Reversal Signal; Risk Assessment
Daily Technical Update
January 18, 2010 (GBP/USD) Reversal Signal; Risk Assessment
- Daily and 4H: The GBP/USD was at resistance and showed its first sign of reversal at the end of last week. (Refer to Weekly Technical Update 1.15.2010).
To start this week, the market showed more signs of reversal. Although,
there was a rally to start the Asian session, the lack of steam by US
session shows weakness.
- In the 4H time-frame, there is a bearish divergence forming with
the stochastic. The stochastic in Daily is also showing early signs of
- 1H: The swing projection would be to the 1.57 area. Looking at the 1H time-frame, the first leg of decline can be assessed as far as reward to risk ratio.
- Using the 3 ATR method, a stop-loss level can be established around 1.6460 (90 pips + the 1.6370 resistance). This
yields a conservative reward to risk ratio of 1.53. This is using the
61.8% retracement as the projected target. This is a retracement
target, which is a conservative one considering the outlook in the
- The 1.60 (78.6% retracement) level is also viable and would yield a less conservative ratio of 2:1. (310 pips : 150 pips).
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