Sunday, May 22, 2011
Trend for 22nd of May 2011
Before markets open and something significant happens I just wanted to give you a few thought of mine about gbp/usd (one of my favorite pairs) and give you a chart of it to look at. You can clearly see that the pair made a double top on Friday and reversed. We can interpret this technical data in two ways. Either the pair was too ‘tired’ to break the most recent high at 1.6305 running from the low of 1.6104 that was made on 18th of May, or the resistance is very strong and gbp/usd will continue going down.
In order to get more clarity we have to watch what happens when the pair reaches a low at 1.6104 (if it reaches it at all). If it forms a reversal pattern and jumps significantly from the level we will assume that the short term downtrend in the pair is over. If the pair does not stop there but goes through we will simply have to trade in the direction in the trend by selling rallies in the pair. However if it does not reach the low but starts coming to its’ previous high I will by a break of it (if it happens). Monday is not very rich in important economic data, so my expectations about daily trends are not very high. I will try to write on some technical topic tomorrow. See you.
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