The bullish run on the USD is causing most of the major pairs to trend beautifully – producing ‘text book perfect’ money making conditions for traders. The GBPUSD has been weakening off the back of the strengthening USD, and further statements from the Fed last night caused the USD to strengthen up after going through a short correction this week.
The correction that occurred this week pushed the market into our target zones for entering trend trades. When you learn forex trading, it’s good to note that the mean value generally will act as strong dynamic resistance in a downtrend and is the ideal place for countertrend retracements to terminate. These conditions produce high probability price action trend signals that we jump all over. Last session we got a nice bearish rejection candle off the mean value on the GBPUSD, and even the EURUSD daily charts – which most war room traders are looking to get short on.
Notice how well the previous rejection candle performed off the mean value. Hopefully we will get the same sort of bearish response from this market!
GBPUSD UPDATE
The GBPUSD produced an Inside Day after a quiet trading day – the US banks were off last session so that could have been the cause. The down trend is still intact here, the Inside day formed just under the mean value. If we get a break of the lows this session, price action traders can consider short positions as the Inside day breakout plays out. We recently have a bearish rejection candle here too, demonstrating rejection of moves higher.
A lot of traders panicking about the EURUSD position, this is generally a problem with signals that are taken on friday – weekend gaps and erratic Monday price action can play on your mind. If the trade survives any asia retraces and starts coming back down through the Euro session, then the trade may recover from this spike upwards. If it gets stopped out, well that’s just tough luck, and a fact of trading that you have to deal with from time to time.
GBPUSD DIES OFF
The GBPUSD has responded very nicely to the price action signals we have been covering. A lot of war room traders now ‘risk free’ with most of the recent trade setups using the split money management system covered in our Forex Course.
This is a good example of how waiting for a nice trend to develop and letting price action to tell you when to enter the momentum is a powerful strategy for trading Forex. If you would like to learn more about our price action strategies and precision trend trading – check the price action war room.