1 MTF
Yesterday GBP/USD was on the uptrend before heavy selling pulled the pair down to about 30 pips above Tokyo session low two hours before and after New York open. Then the pair or cable moved aggressively upward and close at around the day high of 1.4606. With a day low of 1.4366, in early Asian session before London open I expected cable to experience profit taking with support at 38.2% (1.4514)
retracement of a swing for previous day's low to high.
Today, in early Asian session, cable was sliding within a descending channel and at point II the pair showed sign of reversing as it almost touched the lower channel line and being above the daily pivot point with a divergence in MACD.(refer to the 5 MTF chart).
Referring to the 1 MTF chart, I made a buy entry at point A. Drawing a fibo retracement of point I and II on the 5 MTF (the red color line fibo), and following the retracement I foresee that the move upward will be fast and above the swing high. The resistance levels above the swing high is 1.4585 i.e. the mid-point of daily pivot and pivot resistance R1 and Asian session high of 1.4589. At this time about 6.50 GMT there was a rumour on-line of sell orders at 1.4590/00.
Drawing a parallel line from two low points, an ascending channel was formed with area around 1.4590 as the second point of the upper channel line. I took this point as my exit of my long position. `At the turn of the top at this level a divergence of MACD Histogram is seen therefore my second entry with a short position. The entry was done based on the 1 MTF chart at point B. Extracting a fib retracement from low at II to high at III(5 MTF chart with green dotted fibo line), at 50% retracement price penetrated the lower channel line (point C at 1 MTF chart) with MACD histogram crossing the zero line( i.e. negative MACD or MACD line cross over the signal line from above).
By tracing the lag and MACD of 5 MTF, I exited at 34% below the swing low and high.
