GBP/USD Bullish Breakout (27 May 2011)

OK..From the 4 hour chart posted above , it's obvious that we have real bullish breakout,MACD and CCI confirmed the breakout , the same thing EMA 50 and the most important is B.band is expanding but RSI is Overbought , so the pair needs to relax a moment from this journey , the pair now is trading so close from Fibonacci extension 200% - 1.6424 - where the pair is supposed to find strong resistance  and decline toward extension 138.2% 1.6310  strong support , a break below this level would test the major support where the breakout happened at 1.6240 , so

According to 4 hour chart the downtrend from 1.6750 is already over and currently a larger consolidation pattern is underway with an intraday target at 1.6240....BUT

We are 1.5 hour away of GMT close , so according to daily chart , the daily trend is upward , the  trend will remain valid as long as stability is above 1.6320 , technical targets are around 1.6520 and 1.6750 , a daily close below -1.6320 - is gonna weak the bullish wave and may lead for bearish correction toward 1.6240 a break below the last one may test the area around 1.6150....

I have more but I need to wait for today's close , Tomorrow I'm gonna add the daily chart with more details...

 

Update: 27 May 2011 06:39 AM

With yesterday's (26 May 2011) close - 1.6391 - the pair found new resistance on daily at 1.6407 yesterday's high , which added high volatility for the pair today ....

Before continuing I wanna mention one important thing , MACD still showing high probability for strong bearish move toward or below 1.6000 level...BUT

Today's close is gonna determine pair's fate the next coming days (week(s) ....

1- If today close is above 1.6407 a new upward trend's already started , its first target around 1.6620 then 1.7000 level...

2- If today close is between 1.6407 -  1.6300 , a larger consolidation pattern is underway with an intraday target at 1.6200 , then we should evaluate pair's activities on smaller time frames - 4 hour - to observe its upcoming direction...the pair (70%) is gonna reverse and attack 1.6750 ..

3- If today close is below 1.6300 (EMA50) , a strong bearish move on the horizon , its first target around 1.6150 , the second one around 1.5900...

Let's wait for today close and see what's gonna happen , today is Friday 27th of May 2011 , the last Friday of May , the market is risky , it may make unrealistic moves , it may hit your stop then move in your favor again...so I prefer staying away for couple of days for safety ...

but since we are in uptrend on 4 hour(the trend is overbought) so I assume a retracement to 1.6300 level before going up again , if you wanna risk a bit, you may buy the pair around or at 1.6303 pending order , your stop 50 pips , your target 1.6520...

 

Trend Direction is Upward , technical targets are around 1.6520 and 1.6750 , the trend will remain valid as long as stability is above 1.6320 , a daily close below this level may lead for a bearish correction toward 1.6150...

The trading range for today probably would be between the support level 1.6300 and the resistance level 1.6550 ...

 

Support         1.6420    1.6320    1.6240    1.6210    1.6125
Resistance    1.6455    1.6520    1.6600    1.6610    1.6675

 

Recommendations: Upon the chart and the explanation posted above, my recommendation is observing trading today for more confirmations...

Best Regards

Haitham653

 


Views: 48

Tags: Dollar, GBP/USD, GBPUSD, Pound

Comment by Haitham653 on May 27, 2011 at 1:16pm

Hello 6cute and thanks for your comments ,

I said " MACD still showing high probability for strong bearish move toward or below 1.6000 level " cause MACD histogram is below the trend line (Negative Cross) - red circle -  this cross indicates a bearish move in the long - term , the last bar is blue indicates a bullish momentum in the short term.

When the histogram closes above the trend line (positive cross) - a trend continuation pattern..

In all cases this is not necessary....

I don't use MACD alone but I like to combine it with other strategies , If today close is above yesterday's high - 1.6407 - I can confirm the downtrend from 1.6750 is completely over on daily chart...

Any question you are welcome !!

Comment by Haitham653 on May 27, 2011 at 6:09pm

you can download it from here:

http://www.mediafire.com/?c7d35968zvajj47

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