Monday May 17, 2010 - 21:35:02 GMT
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Fxtimes: Daily Technical Update GBP/USD Assessing Reward to Risk After Pullback
Daily Technical Update
May 17, 2010
GBP/USD Assessing Reward to Risk After Pullback
- 1H: Last week, as the GBP/USD pair tested 1.45, I was preparing for some correction before a break below. However, this week started with a decline of more than 200 pips right through the 1.45 low before the European session even started. During the European session, it was in correction and is now testing 50% retracement level.
- If the market fails to continue higher than 1.4633, it creates a negative reveral. If the market tops off at the 1.45 it would be tested a resistance. This pullback would confirm the break and a target of 1.38. Refer to â€œRetesting 1.45â€œ. However in the shorter term, a swing is projected to 1.41 first.
- 15min: The 15-min time-frame shows that the correction remains in a bearish context as the RSI could not break and sustain above 60. We see price action also testing a rising support. A break will likely lead to confirmation of our bearish scenario â€“ swing projection in the short-term to 1.41.
- The break of the recent common RSI low near 50 would also serve as a confirmation.
- The Reward to Risk ratio can be obtained by establishing a protective stop level. This can be for example 2 ATRs above the 1.4470 high. The ATR is 30, so 2xATR = 60. 60+1.4470 = 1.4530.
- In this rough estimate, if the trigger closed near 1.4385, we would have an R/R of about 1.96:1.
Commodity Trading Advisor
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.
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