Posted on May 29th, 2008 at 11:25 AM
As you will soon see, it pays to do your homework.
Let's see what happened with the charts since posting Parts I & II of the 'GBP/USD in the Bermuda Triangle'.
If the Dollar Index (DX A0) trade been taken, you would have entered long at around 72.110 with a stop loss at around 71.750. Reviewing the Fibonacci Derivative levels, the closest that the US Dollar got to the green .786 level of 71.757 was 71.823. The risk reward factor on the trade was 7.3:1. As of today, it has met the 3:1 level.
(click on any of the charts for full view)
Before:
After/Present:
The Natural Scale Gann Box level of 71.875 was perfect.
Before:
After/Present:
Also, my standard Gann Box was also dead on for support as far as the green 1X4 angle was concerned. The first time (DX A0) met that angle the market turned up. When he met it again it responded in a similar fashion. If he can get above the Down 1 X 1 (Brown) angle, he will actually be mounting strength.
After/Present:
Lastly, as far as the US Dollar (DX A0) is concerned, the Bullish Reversal bar was spot on. The 8 to 11 bars from the high produce the anticipated reversal.
Before:
After/Present:
Now let's take a look at the GBP/USD. It did break at the time and price resistance level of 1.9850. Recall from my first post,
"WD Gann often said when Time and Price Square - a change in trend is emient. The price increment of 13 units is pretty much at the forementioned 1.985 level (the midpoint of the ellipse tool). So if we consolidate over the next few days and run into 144 trading days from the high, that could very well be another perfect square out that meets resistance at my down 1 x 1 angle."
Today is 144 bars from the high and we have been moving down nicely. In fact, have you dropped down to a 60 minute chart there was a clean Type II trade for entry high in the move.
Going back to the daily chart, I am now looking for the trade to play out as far as the Advanced GET Stochastic sell is concerned.
Before:
After/Present:
I must say that I was disappointed with the recent Forex currency correlation of the British Pound against the US Dollar. The correlation number gives us an estimate of how closely currency pairs move together or opposite each other, and how strong or weak over a specified period of time.
The correlation between the USD and the EURO or even the Yen moved better in my opinion. But you know how that goes.
I hope this was helpful for you.
Regards & Trade Well,
Ernest Osias.
PS - If you are short based on the 60 minute chart, I would consider moving the stop to risk free...
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