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May 19, 2009

5/19/09 GBP/USD TRADE SETUP



Hello Traders!

Been a few days, action has been slow or choppy, with little follow through to the upside of downside. In general, we have seen JPY pairs trending upwards over the past couple of days, meeting significant chart resistance today.  It will be very interesting to see where the break goes, up or down, but for now it looks as though the USD pairs are setting up a little bit more clearly, and with more potential so I am going to focus on a GBP/USD trade setup that I am looking at.  The chart here will give you a good idea of what I am thinking with regard to support/resistance, entries and exits.  I outlined a previous channel rejection from several weeks ago, in which we got a very nice protracted downward move resulting in 450-600 pips from the point of rejection.  These types of setups are fantastic for traders that wish to use a small position with a bit more generous stop in the hopes that a nice move will produce very acceptable profits due to the size of the move.  I am personally going to get short the GBP/USD tonight, and set my stop about 25 pips ABOVE the top channel boundary that is outlined on the chart.  My profit target order will be located just above the bottom channel boundary, no need to drill for every last pip. That is the way to loose a lot of money, and previously profitable trades.

So, keep an eye out for significant movement on Publish Postthis GBP/USD setup.  Things right now appear to have rejected off of the top boundary, but it will be difficult to know whether or not there is serious follow through potential until after Europe opens tonight. I will be back with updates along the way! Good luck, looks like a nice setup!

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