GBPUSD was one of the best-performing currencies on Monday, which raced above the 1.4300 handle, extending a rally that has not created a retracement in the past seven trading days. The cable reached a fresh 22-month high of 1.4362 during today’s Asian session, signaling that the pair is ready for a bullish run and point to more strength in the market.

In the daily timeframe, prices rebounded off the mid-level of the Bollinger band (20-day SMA) and the 40-day simple moving average (SMA) and extended their rally, and based on the technical indicators, momentum is to too strong to provide a sustained move higher. The RSI indicator is approaching the overbought zone and is touching the 70 level, while the MACD oscillator is holding above its red-trigger line.

If price action remains above the 1.4345 (immediate support), taken from the high on January 25, there is scope to test the 50.0% Fibonacci retracement level of 1.4575 of the significant downward movement on the weekly timeframe from 1.7180 to 1.1980. Clearing this key level would see additional gains towards 1.4770. This is considered to be a strong resistance area which has been tested a few times in the past.

If the price falls below the 1.4345 – 1.4245 support zone, then the focus would shift to the downside towards the 20- and 40-SMAs at 1.4136 and 1.4017 respectively. In case of a successful drop below these levels, it could open the door for the 1.3890 support followed by the 23.6% Fibonacci mark of 1.3815 of the upleg from 1.2100 to 1.4345 could act as critical support.

My Analysis using RSI :

Fx Overbought/Oversold: It’s Tough To be a British Pound Bear Out There

Technical Analysis via RSI Key Takeaways:

Sterling strength pervasive against havens, EUR/GBP breaks to the lowest level since May
Australian Dollar quietly strengthening against weak FX (JPY, USD)
US Dollar only strong against JPY, hedge funds favoring further greenback weakness

While it’s too early to call ‘Mission Accomplished,’ the spot rate of cable (GBP/USD) is testing the 200-week moving average. The 200-WMA currently sits at 1.4231, and a weekly close above could make it even more difficult for institutions to hold their rare GBP short positions.

While spot cable at 1.4335 is still a long way away from the Brexit vote day high of 1.5018, a break above the 200-WMA would clear a massive hurdle.

Our other analysis using Andrew Pitch Fork, MFI & Stochastic,

We technically detect a GOOD CHANCE.

We found Bearish Butterfly Pattern GBPJPY 0.02% H1 & H4:
1. The chance to form a Bearish Butterfly Pattern
2. Expected price will reverse down towards GBPJPY 0.02 at 152.35
3. With precision measurement (pattern match> 90%), we will approximate position:
Sell Limit GBPJPY 0.02% 153.55
SL 154.20
TP1 150.20 TP2 147.90 TP3 145.90

Hopefully useful & can be used as a comparison data, this is only a prediction from us, perfection only God had.

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Trading With Pivot Points In Forex

Pivot points have long been used by Forex traders as a means of determining directional changes in the markets.

Pivot points are calculated levels within the market that provide both potential support and resistance levels and also a leading indication as to which way the market might be heading.

The generally held view is that if the market trades above the pivot point, it is seen as having bullish sentiment. Conversely if the market trades below the pivot point it is seen as having bearish sentiment.

As well as providing the actual pivot point, the calculations also provide immediate support and resistance levels in the market known as ‘pivot levels’. These are projections of points where the market may slow up or reverse. Three levels of resistance are calculated above the pivot point as well as three levels of support below the pivot point. These are commonly referred to as R1, R2, R3 and S1, S2, S3.

Calculations for pivot levels are made from the open, high, low and close prices of a currency pair over a selected time period. These calculations can be made for daily, weekly or even monthly charts.

Pivot points are popular among traders as unlike many technical indicators they are considered a leading rather than a lagging indicator. This is because they signal potential levels of support and resistance in advance of the market reaching these levels.

With many traders using and reacting to pivot points there is a natural tendency for markets to respond to these levels. It is therefore beneficial to maintain an awareness of these pivot levels even if your current strategy relies on separate indicators for defining trade entry and exit points.

Calculating Pivot Points

The calculation of the levels is fairly straightforward. We include the calculation below for those who are interested in calculating their own levels.

To calculate the pivot point on a chosen timeframe you will need the open, high, low and close prices for the currency pair over the selected timeframe. The calculation is as follows:

• Resistance level 3 (R3) = HIGH + 2 * (Pivot - Low)
• Resistance 2 (R2) = PIVOT + (R1 - S1)
• Resistance 1 (R1) = 2 * PIVOT - Low
• Pivot Point (PP) = ( HIGH + CLOSE + LOW ) / 3
• Support 1 (S1) = 2 * PIVOT - HIGH
• Support 2 (S2) = PIVOT - (R1 - S1)
• Support 3 (S3) = LOW - 2*(High - Pivot)

The three most important pivot points are R1, S1 and the actual pivot point.

Alternatively many sites provide pre-calculated pivots for the major Forex pairs. You can of course generate your own levels by using a pivot point calculator.

Trading with Pivot Points

The basic idea behind pivot point trading is to use a move towards or break of R1 or S1 as an entry point. As the market reaches R2, R3 or S2, S3 it is likely to become increasingly overbought or oversold. These levels are then used as the exit points for the trade.

For example the market is just above the pivot point. Here your initial profit target would be set as R1 with a stop loss placed just below the pivot point. A break of this level would see R2 set up as the next profit target with the stop moved up to just below R1. If R2 is broke then so R3 becomes the new target and the stop is moved to below R2.

The same is true in reverse for short trades, remembering to move the stop loss behind the previous price target as each level is breached.

This approach is particularly suitable for breakouts type trades but it is also possible to successfully trade market pullbacks that occur between the levels.

For example if you identify the trend as ‘long’ and the market pulls back towards S1, you could then enter a trade with a stop just below S1 and an initial profit target of the PP.

While pivot points do not always work as precisely as we have seen here they are useful tool to add to your toolbox. They help to highlight areas of possible support and resistance in the market and can be successfully combined with other technical indicators to help validate trading setups.

Gaddafi’s last stand

http://www.forexlive.com/blog/2011/08/21/gaddafis-last-stand-2/

By Sean Lee

Looks like the end might soon be nigh for Gaddafi’s reign in Libya; the Presidential guard has reportedly surrendered and his son has been captured.

The USD is looking reasonably well bid this morning, following on from the recovery which began in late NY trade on Friday after cable traded above 1.66 and USD/JPY below 76.00

A Libyan rebel fighter on the captuyred 27th Bridge, which leads into the centre of Tripoli. Photograph: Filippo Monteforte/AFP/Getty Images.
http://www.guardian.co.uk/world/2011/aug/21/gadaffi-fight-blood-rebels-tripoli

GBP/CHF Technical Analysis

GbpChf must be able to sustain above that red daily trendline. Otherwise next week it will go down.