GBP/USD: Waiting for a Trend Line Break

Trade Idea: 2012-2-16 2:02

The dollar has been on a rally hasn't it? However, I have a few reasons up my sleeve to think that it's about to end soon. For one, I believe that the downward move on GBP/USD is already overdone.

On the 15-minute chart we see that the pair has been slowly making lower highs. However, I think it's noteworthy to point out that it has failed to make a new low. This leads me to think that the rally could be over soon.

I won't be too hasty in pulling the trigger though. I will wait for GBP/USD to break the resistance at the falling trend line. So, I'll look to buy GBP/USD around 1.5700.

On the fundamental side of things, we just saw the FOMC meeting minutes reveal that the Fed was pretty open to quantitative if the U.S. economy were to become worse. While it has not happened yet, I think that traders could start pricing in their expectations already. Remember, quantitative easing is usually considered bearish for a currency.

In the U.K., we've been seeing a couple of good reports. Their consumer price index, for instance, continued to taper down. The last report came in at 3.6%, down from its high at 5.2%. Additionally, the manufacturing PMI, Halifax HPI, Manufacturing Production, and Trade Balance ALL beat consensus.

So, based on both my fundamental and technical analysis, I think the pair is going to head higher soon and break the falling trend line. Hopefully, I got it right.

XOXO,

Huck

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4 comments

On Thursday February 16th, 2012 at 09:49AM by don555 - Like - 0 People

Huck I think you may be interested in the following as it is very profitable. Go to forex factory and under forums-trading systems look for Daily Chart w/ 10sma I think you will be delighted with what you are about to uncover.
On Friday February 17th, 2012 at 03:22AM by Brad - Like - 0 People

Don, this is some good info for people to read over and maybe use the system. There are a lot of systems for trading that "work". One of the most important things is to learn to find one that you like, and stick to it. The guy on that site says that of course he does not win every trade. Remember, that, while a lot of systems may work for a while, most will go through times of problems. Possibly even over a long period. How will you deal with the times of problems? Will you change systems? Maybe you shouldn't. Maybe you should stick with that system. But, some would change, which might not help much, because the system they change to will probably have problems as well. Will you survive? Remember, that without money management and managed risk, you probably won't survive. That is why you see so many on this site recommending to risk no more than one percent a trade. So, make sure to also go study money management and risk management. Make sure to practice it, and don't get off on the wrong track that take many to their financial doom. Good luck on your trading.
On Friday February 17th, 2012 at 04:57AM by Brad - Like - 0 People

A good trader, who only tended to give people enough information to be dangerous, once said, he could give people the exact system he used and was successful using over the long term, and most would fail using it. Why? 1. Because they didn't consistently follow the system. 2. Because they didn't manage risk well.
On Friday February 17th, 2012 at 10:27AM by don555 - Like - 0 People

Brad there are probably more systems out there that dont work. At least this guy has taken the time to go through it with all concerned explaining how it should work and for him it works on a regular basis with as you say with money management and risk management.

Just hoping if someone takes it on here they can maybe improve it with a little twist or adjustment and everybody wins.

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GBP/USD: Waiting for a Trend Line Break

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