FX.co ★ The GBP/USD technical analysis and trading recommendations for January 20, 2011

4-hour timeframe

Overview:
The buy signal with target level at 1.5722 is being developed; though the target level has been reached, there are no signs of upside movement yet, we can also see the current correction. The formed buy signal is strong and confirmed since the Chinkou Span fixated above the price graph and the price managed to fixate above the Ishimoku cloud. At the moment the first target for the upside movement is 1.6010 – the first resistance level. If this level is passed the next target will be the second resistance level at 1.6155. The upside movement continues while the price is above the Kijun-Sen(1.5935), if the price fixates below this line it is recommended to cut long positions. The Chinkou Span fixed above the price graph, which confirms the current buy signal and indicates bullish sentiment. The Bollinger bands show the continuing upside movement, the lines are diverging and directed up. The MACD is descending, indicating the current corrective movement.
Trading recommendations:
Currently it is recommended to trade up with the target to 1.6010, and further to 1.6155. Stop Loss should be placed below 1.5935. Resume trading up after the MACD reverses up.
In addition to technical image, one should take into account the fundamental data and the time of their release.
The chart annotation:
Ichimoku 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 white bars in the indicators window.