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- 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
