Wednesday, July 27, 2011

#GBPUSD Long Term Technical Picture

The pound has a very interesting technical picture. The weekly chart shows that price reached a resistance trend line that extends from 2008 yesterday.

A short position could be established with a very tight stop loss. This would be a very discretionary trade as the monthly trend is up as well as the weekly trend. It would be based on R:R. By looking at price action added to the closer proximity to the low of the year, it was a clear opportunity to get a possible extension of the yearly range south if it actually happens.

Interestingly enough, both RSI and MACD demonstrate a very discrete but confirmed divergences.

While actual price action shows price making higher highs and higher lows, RSI shows action inside a sideways parallel channel. A break of  of the lower line is expected thus drawing down force pressure.



 
While chart price action is inside a rising channel, RSI is clearly showing a sideways channel: divergence. Price reached a key trend line earlier this week.
 
 
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