FX.co ★ Technical analysis and trading recommendations for GBP/USD for July 28, 2010

4-hour timeframe

Overview:
The sale signal having not reached the target level had weakened and thereafter canceled. A new ‘buy’ signal has formed and is continuing with the target level of 1.5666. This signal is confirmed by Chinkou Span fixation above the price curve and the price fixing above Ishimoku and Kijun-sen. Also, yesterday the price did not managed to fixate above the first resistance level of 1.5542. Therefore, the intermediate target of the upward movement is the second resistance level of 1.5658 (the target level). Chinkou Span is placed above the price curve testifying to an uptrend. In case of the price fixation below Kijun-sen (1.5375), the purchase signal will weaken and long positions should be closed. Also, judging by Ishimoku lines placement a correction is about to happen. Therefore, in case of MACD down-reversal or another signs of its beginning it is recommended to close long positions. Bollinger bands show an upward movement – the bands are diverging and up-directed, indicating bullish sentiment. MACD is increasing also signaling about ascendant motion.
Trading recommendations:
In this situation, it is advisable to bull with the first target at 1.5658. place stop loss below 1.5375. In case of MACD down-reversal close positions manually.
Apart from the technical picture, it is important to consider the fundamental reports and time of their release.
The chart annotation:
Ishimoku indicator:
Tenkan-sen — red line
Kijun-sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator:
The red line and the histogram with the white bars in the indicators window.