More Trading Opportunities on Gbpchf

Written by on July 16, 2010 4 Comments

Sophia Todorova is the host of the live trading room for the London session. She has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens. To Trade Live with Sophia Join Winners Edge Trading Premium Services.

The Gbpchf currency pair is in the buy zone on a 4hr chart, where it is attempting a reversal. The chart below shows an inverse head and shoulders pattern. In this context, it is very likely for the pair to test 1.6135. However, just above this level is daily resistance. After the bearish breakout of a major trading range, the down move found support at weekly lows, but has so far been unable to break above 1.6250. I am very bearish on this pair, and am looking for an entry to short. A failure of the 4hr bullish reversal will give me the opportunity to position short to target the next weekly support at 1.5250.

Trading Strategy

 

 I am watching for a bearish close below 1.5980, then sell after a retest of the 1.6025 level. I am considering 1.6200 for stop placement, and my first target for profit is 1.5900. I will scale out of additional portions on the way to my final target at 1.5250. Currently a trading opportunity exists to buy towards 1.6125, but considering the current GBP weakness, I will be fore-going it. I am only interested in shorting the pair. If the trade sets up as I outlined above, it will offer a risk/reward ratio of 1:4.

If you are interested in trading this with me, it is a good idea to follow me on twitter, since I am able to give quick updates there, and you will be able to get them instantly.

 When trading always use a stop loss and calculate the proper risk management for your account. This analysis aims at providing assistance to the forex trading community here at Winners Edge Trading, thereby helping them to make informed trading decisions.

Have a great weekend, and thanks for reading :)

My last post is still at a critical point: http://www.winnersedgetrading.com/eurjpy-a-game-of-bulls-vs-bears/

Other useful blogs:

 Forex Crunch:Top 5 Sites For Forex Rates

 The GeekKnows- Daily commentary on eurusd

One other free trading tool I recommend is Currensee . It can be a useful tool to be able to see how other professional traders are doing.

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  • http://twitter.com/FXstorm Sophia Smith

    You're welcome, Nisar. I do encourage your feedback an personally try to improve a bit everyday. Comments on the posts help me do that, so I appreciate them. Thank you, and successful trading to you :)

  • http://twitter.com/khangi61 Nisar Ali

    thanks for your reply, it does give us a more insight of trading and helps us to understand the patterns, obviously you are an experienced trader and i am kind of new in the business so i may express my shallow understanding of the trading. counter analysis of a pair help me a lot. i really enjoyed it.

    thamks for your encouragement.

  • http://twitter.com/FXstorm Sophia Smith

    Hi Nisar. Thanks for your comments. I think there has been a basic misunderstanding. I never intended to place much emphasis on the 'poitential' inverse head and shoulder pattern. I pointed it out merely as a precaution that the pair could head a bit higher. As it turned out, I never got a confirmation for the sell. I'm sorry it seems complicated to you, as I made the effort to simplify the setup as much as possible. The spread does not bother me, as, it is meant to be a swing trade. When there is a potential 750 -pip gain to be had, I really do not worry about a 5-pip spread

    Eurjpy is indeed looking bearish, but as a swing/position trader, I do not see a shorting opportunity at present. Perhaps one will develop throughout the coming trading week. Thanks again for your comments, and do enjoy the rest of your weekend.

  • http://twitter.com/khangi61 Nisar Ali

    there is a possibility of inverse head and shoulder only if the neck line is broken. the price did break the support level but could not hold it. if it close below the support then old support becomes new resistance. but if it didn't then pattern could be failed head and shoulder. there is another support at 1.5945 and 1.5830. trade seems a bit complicated plus spread is very high as well. lets see how the trade progress.
    there is double top forming on eur/jpy. if the candle close as it is heading, it will also be a bearish engulfing pattern. I think good opportunity for going short. what you say about EUR/JPY.
    thanks