24 Nov GBP:USD Swing Long – Short Term Trade; 24th Nov 2014
Having day traded the short term range in GBP:USD throughout much of last Week, this morning I entered a long, initially planned as a day trade but after further thought decided to give it some breathing space, albeit with one eye regularly checking up on it.
The main trend is clearly down and has been for some Months but a time has come where practically every time frame is showing almost extreme levels of positive MACD divergence. This in itself is no guarantee of a reversal, but should lead to a correction of some kind, and even a weak correction is still adequate to take 100 pips or more.
Here is the 15 minute and 4 hourly time frames demonstrating that divergence:
The 4 hourly chart also shows an area of S/R approximately 40 pips above the current price which should be a fair initial price target from which a further insight into buying strength can be determined:
The Weekly time frame gives a better view of price hovering around the 61.8% Fibonacci retracement level taken from the July 2013 to July 2014 rally, again adding reason that buyers may appear around current levels even if only for a trade-able dead cat bounce.
The trade was entered at 1.5646 based on the 5 minute time frame (as this was originally intended to be a day trade) thus currently shows a profit of around 50 pips. I’ve since moved the stop loss to below last Week’s low but this has only been placed as security if selling suddenly resumed. It would be my intention to scrap this trade as soon as signs of further weakness become apparent.