GBP/USD 23 MAY 2012

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No trade setup on Sterling yesterday, price fell to test the B lows and its still in that area.

FOR TODAY:

We can sell a break of the B low at 5731 if price heads lower during this session, else we can only sell up at the 618/786 which is some 220 pips away after we get bearish reversal cs formations at either of those levels.

Long trade will be considered after a clear bullish cs formation off the lows in the UK session, this will tell us that price might be ready to rally deeper into the AB swing

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

SHORT: Will be going short only IF:

A break of the 5731 lows will open the downside with price heading for 5600. Else we need price to rally to the 618/786 of this swing and give us bearish reversal cs formations at either of these fibs. Place stop 13 pips above the high of the cs formation, max 1% risk. Limits defined at entry.

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

LONG: Will be going long today only IF:

Price is currently at the B lows, we need a clear bullish cs formation from currently levels or while inside the 5731 lows to initiate a long trade set-up, place stop 10 pips below the low of the cs formation, max 1 % risk, limits can be 100 pips.

A break of the 5731 lows negates this view and opens the downside giving us a new AB swing.

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