Late last Thursday I had decided to take the week off. Mainly because of a few transitions in market trends on the daily chart and also because my bestie’s kids were on spring break and I wanted to have some fun with them while they were out of school. The recent volatility has NOT made me regret that decision one bit but there are some trades that i am looking at cautiously and with much less position size.
Here’s where the cable gets interesting. The cable has continues to turn over as the pound sterling is topping out against the dollar. The double top on the daily GBP/USD along 1.6343 and 1.6299 – albeit soft – has contained the uptrend and caused the market trend transition out of the uptrend.
The short Channel Up could also be considered a Flag. The angle of the Flag being up makes it a Bear Flag and therefore the expectation is for more downside now that the lower trendline has been broken.
Fast forward to what I’m seeing today. The GBP/USD has traded lower today as the U.S. Dollar rallied slightly higher, but is still in a downtrend. The managed to reach the and trade slightly above 77.00 to a 77.13 high before losing footing above the major psychological level.
By the way, I have started a Baby Pips Forum thread to discuss these two tools and the many ways in which I use them.
The bear flag breakdown is again approaching the support area near 1.5978 as prices battle around the “6000″ level.
This level is where the bearish sentiment and momentum is most likely to accelerate if broken. Since prices are below the 34EMA Wave and plotting red on the GRaB candles, look for more downside, but respect the near-term support.
Here’s my latest Forex AM program for those of you with some extra time on your hands!