Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The GBPUSD “rally has reached the 61.8% retracement of the decline from the June high (1.5392) and the 38.2% of the decline from the beginning of the year (1.5408). The rally from the July low consists of exactly 2 equal legs right now.” The trade below last week’s low increases confidence that a high is in place. In fact, the recent high could serve as the right shoulder of a head and shoulders pattern.
FOREX Trading Strategy: Wrote on 7/25 that “the rally in late US trading on ‘news’ is consistent with capitulation as well but there is no need to try and pick the exact high.” As it turned out, that was the exact high and we can now sell against that level. Due to upcoming news releases and likely volatile conditions, I plan on entering the market in halves with stops at 2 levels. Short entries at 1.5265 and 1.5305. Stops at 1.5360 and 1.5440. Target half at 1.5030.
LEVELS: 1.5026 1.5100 1.5150 1.5260 1.5308 1.5353