GBP/USD 28 MARCH 2012

GBP/USD - follow me on twitter @fxdailyforecast and stocktwits.com/fxg

We went short yesterday on the failure at 5991, the break was not sustained and price remained below the 5991 highs as can be seen on the 4h chart - its the same swing as the 1h chart, just easier to fit on the screen.

FOR TODAY:

Today will be a DA86 trading day where we expect price to continue down, maybe even test yesterday’s highs before resuming the fall. We will look to add to open positions only if current position is 50+ pips in the money. We will look to sell after a rally and bearish cs formation.

A sustained break above 6000 negates this view and starts a reversal on this timeframe.

If we don’t get the setup we are looking for then we don’t trade.

SHORT: Will be going short only IF:

We get a test of yesterday’s highs followed by a bearish cs formation. Place stop 13 pips above the high of the cs formation, max 1% risk. This will be considered a ST with limits down at the BF786 over coming sessions.

If we don’t get the setup we are looking for then we don’t trade.

LONG: Will be going long today only IF:

We get a dip followed by a clear bullish cs formation. This will be a sign that the bulls are heading for 5991 highs, place stop 10 pips below the low of the cs formation, max 1% risk.

If we don’t get the setup we are looking for then we don’t trade.