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Currency Traders May Witness A Slight Correction in the GBPUSD as the Pair Breaks Above Key Resistance

Currency Traders May Witness A Slight Correction in the GBPUSD as the Pair Breaks Above Key Resistance

2011-02-10 16:30:00
Michael Wright, Currency Analyst
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Potential 24 Hour Setups

Currency Pair

Potential Target

Pivot Support

Pivot Resistance

Long GBPUSD

1.6183

1.582

1.62

*Trade updates during the course of the day will be provided through our real time news page.

Review of Price Action on the Previous Day’s Trade

Currency

Entry

Potential Target

Close

Short GBPUUSD

1.6094

1.6060

1.6060

*Note: EURUSD short is from the last updated report on Thursday

The GBPUSD managed to slip above its descending channel on the hourly chart, which signals for a short term bounce in the pound. Indeed, the British pound is relatively unchanged on the day following the Bank of England interest rate decision as the central bank keep rates unchanged in February as widely expected. The recent break above the resistance area does come to a slight surprise to us as risk aversion dominated Thursday’s trade. However, with producer prices and a possible dismal U.S. University of Michigan confidence report, currency traders should not rule out a slight bounce in the pound. All in all, we will look to enter a long position at 1.6109 with a target of 1.6183. As price action moves in our favor, make sure to place a trailing stop in order to avoid any unforeseen losses.

GBPUSD 1 Hour Chart

Intraday_Trading_02.10.11_body_gbpusd.png, Currency Traders May Witness A Slight Correction in the GBPUSD as the Pair Breaks Above Key Resistance

Charts Created Using FXCM’s Strategy Trader

Close: 1.6109

Retail positioning relates to our speculative sentiment index which illustrates where traders are at in the market. The larger the retail positioning is within the highlighted area, the more likely it is that longs exceed shorts or vice versa. We will look to use this indicator in conjunction with other technical developments to dictate price action over the next 24 hours.

Every day at 16:00 GMT, we analyze potential 24 hour trade set ups. The trade is no longer valid if it is not triggered by 16:00 GMT the next day. Good luck trading!

Written by Michael Wright, Currency Analyst

To Receive Future Articles by Email, please contact me at instructor@dailyfx.com

Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, Intraday Trading, and Forex Trading Weekly Forecast

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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