Fan Yang \ 9:48 AM EST \ December 3rd, 2009

GBP/USD Assessing Reversal


* 4H and 1H: The attempt to invalidate the short-term bearish outlook failed as 1.6700 held. (Refer to Daiy Technical Update 12.02.2009 GBP/USD.)
* In the 4H time-frame, we may have a trigger developing but it would give us poor reward to risk ratio using the ATR in this time-frame. Reminder that the GBP/USD has been choppy within a ranging mode, so targets should be limited to more conservative ones.
* We see that the 1.6250-1.6270 area is a viable target, but perhaps since it is a very short-term projection, a 1H time-frame can be used to assess the setup.
* In the 1H time-frame we see a completed double top. The short-term support at 1.6625 has broken, but the stochastic is oversold and there may be some support at the 1.6550 area. This suggests timing may be wrong for these signals.
* Nonetheless, the above screenshot shows the reward to risk ratio is 1.6:1, if this double top formation were to be trigger. The ratio may be improved if we are patient and wait for a correction rally to establish a lower powerline than the 1.6700 we used above to define the stop-loss level. W

Fan Yang
Currency Analyst,
Commodity Trading Advisor
Via fxtimes.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

Foreign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

Daily Technical Update
January 18, 2010 (GBP/USD) Reversal Signal; Risk Assessment



* Daily and 4H: The GBP/USD was at resistance and showed its first sign of reversal at the end of last week. (Refer to Weekly Technical Update 1.15.2010). To start this week, the market showed more signs of reversal. Although, there was a rally to start the Asian session, the lack of steam by US session shows weakness.
* In the 4H time-frame, there is a bearish divergence forming with the stochastic. The stochastic in Daily is also showing early signs of crossover.
* 1H: The swing projection would be to the 1.57 area. Looking at the 1H time-frame, the first leg of decline can be assessed as far as reward to risk ratio.
* Using the 3 ATR method, a stop-loss level can be established around 1.6460 (90 pips + the 1.6370 resistance). This yields a conservative reward to risk ratio of 1.53. This is using the 61.8% retracement as the projected target. This is a retracement target, which is a conservative one considering the outlook in the upper time-frames.
* The 1.60 (78.6% retracement) level is also viable and would yield a less conservative ratio of 2:1. (310 pips : 150 pips).



Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

Foreign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.
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All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.