Yesterday GBP/USD slide to a three day low of 1.4269 in early London session before recovering aggressively and close for the day higher than the opening price at slightly above 61.8% retracement of three days swing high at 1.4527 and swing low of 1.4259. An upbeat economic reports in UK and US effected a risk aversion reversal sentiment with stock market in New York rebounded strongly in late session.
With resistance at 61.8%, I expected early Asian session cable to slide down on profit taking. In early Asian session, cable slipped downward under the downtrend 1(5 MTF chart) before finding support at 1.4362(at 32.8% of three days swing). Price corrected within the uptrend line 2 and I extract a fibo retracement of point i to point ii as S&R for my scalp trade for today.
My first trade is a long position at point A with MACD divergence, a strong support level at 1.4350 and positive indicators. At point A there is a penetration of upper resistance line of declining channel 3. Exit the position at B at resistance round number 1.4400, 61.8% retracement and the diagonal resistance of uptrend line 2(see 5 MTF).
With reversal at 61.8% I expect cable to at least retrace back to the swing low and my short entry is at point C with negative indicators.
