Risk aversion was the main theme since yesterday in forex market as cable or GBP/USD was stop from going higher by the descending 200 hours EMA and a long term 19.1% fibo retracement at 1.4477 and the hourly resistance at 1.4493 yesterday as the fall continue. A subsequent price correction occurred during late New York session which was being capped at 61.8% fibo retracement of the day's high at 1.4527 and low at 1.4351.
Early Asian session today, saw the pair being pushed downward breaching the support of previous day low and there was a dead cross between the 20 SMA and 60 EMA. (refer to the 1 HrTF chart above).
A swing high of 1.4409(point 1) and low of 1.4336 (point 2) before the Europe/London session will be used to extract my support and resistance level form my trading.(refer to the 5 MTF chart below)
Thirty minutes before Frankfurt open, the pair penetrate the previous day low and the intermediate price swing's fibo 19.1% retracement and formed a downtrending channel(brown color). Prices than consolidate between resistance level at 1.4345 and support at 1.4327.
On 1 MTF chart, my first entry is a sell at point A (note: this is a downtrend, a lesser risk by taking a sell position) by fading the top of the channel and resistance line 1.4345. My exit is point B at lower channel and 34.0% below the swing low.
Second entry is for buy at C i.e. fading the support line with lag crossing above 15 and MACD positive. There is also a divergence in RSI (refer to 5 MTF chart ) Target will be lower pips since the trend is still downtrend. Exit at D with resistance of upper channel line and 200 EMA.
The third entry is at E, fading the resistance with red lag crosing 85 from above and MACD negative. Target is expected at 55% below swing low or at 38.2% extension.
5 MTF
1 MTF
