RSI Forex Analysis In Fundamentals

What Does Relative Strength Index - RSI Mean?

A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. It is calculated using the following formula:

RSI = 100 - 100/(1 + RS*)

*Where RS = Average of x days' up closes / Average of x days' down closes.

As you can see from the chart, the RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued.

Read more: http://www.investopedia.com/terms/r/rsi.asp#ixzz1VmWK7wv1

Read more »

RSI Indicator Forex Full Details On RSI

Developed J. Welles Wilder, the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30. Signals can also be generated by looking for divergences, failure swings and centerline crossovers. RSI can also be used to identify the general trend.

RSI is an extremely popular momentum indicator that has been featured in a number of articles, interviews and books over the years. In particular, Constance Brown's book, Technical Analysis for the Trading Professional, features the concept of bull market and bear market ranges for RSI. Andrew Cardwell, Brown's RSI mentor, introduced positive and negative reversals for RSI. In addition, Cardwell turned the notion of divergence, literally and figuratively, on its head.

Wilder features RSI in his 1978 book, New Concepts in Technical Trading Systems. This book also includes the Parabolic SAR, Average True Range and the Directional Movement Concept (ADX). Despite being developed before the computer age, Wilder's indicators have stood the test of time and remain extremely popular.

Calculation

                  100     RSI = 100 - --------                  1 + RS      RS = Average Gain / Average Loss  

To simplify the calculation explanation, RSI has been broken down into its basic components: RS, Average Gain and Average Loss. This RSI calculation is based on 14 periods, which is the default suggested by Wilder in his book. Losses are expressed as positive values, not negative values.

The very first calculations for average gain and average loss are simple 14 period averages.

• First Average Gain = Sum of Gains over the past 14 periods / 14.
• First Average Loss = Sum of Losses over the past 14 periods / 14

The second, and subsequent, calculations are based on the prior averages and the current gain loss:

• Average Gain = [(previous Average Gain) x 13 + current Gain] / 14.
• Average Loss = [(previous Average Loss) x 13 + current Loss] / 14.

Taking the prior value plus the current value is a smoothing technique similar to that used in exponential moving average calculation. This also means that RSI values become more accurate as the calculation period extends. SharpCharts uses at least 250 data points prior to the starting date of any chart (assuming that much data exists) when calculating its RSI values. To exactly replicate our RSI numbers, a formula will need at least 250 data points.

Wilder's formula normalizes RS and turns it into an oscillator that fluctuates between zero and 100. In fact, a plot of RS looks exactly the same as a plot of RSI. The normalization step makes it easier to identify extremes because RSI is range bound. RSI is 0 when the Average Gain equals zero. Assuming a 14-period RSI, a zero RSI value means prices moved lower all 14 periods. There were no gains to measure. RSI is 100 when the Average Loss equals zero. This means prices moved higher all 14 periods. There were no losses to measure.

Here's an Excel Spreadsheet that shows the start of an RSI calculation in action.

Note: The smoothing process affects RSI values. RS values are smoothed after the first calculation. Average Loss equals the sum of the losses divided by 14 for the first calculation. Subsequent calculations multiply the prior value by 13, add the most recent value and then divide the total by 14. This creates a smoothing affect. The same applies to Average Gain. Because of this smoothing, RSI values may differ based on the total calculation period. 250 periods will allow for more smoothing than 30 periods and this will slightly affect RSI values. Stockcharts.com goes back 250-days when possible. If Average Loss equals zero, a "divide by zero" situation occurs for RS and RSI is set to 100 by definition. Similarly, RSI equals 0 when Average Gain equals zero.

Parameters

The default look-back period for RSI is 14, but this can be lowered to increase sensitivity or raised to decrease sensitivity. 10-day RSI is more likely to reach overbought or oversold levels than 20-day RSI. The look-back parameters also depend on a security's volatility. 14-day RSI for internet retailer Amazon (AMZN) is more likely to become overbought or oversold than 14-day RSI for Duke Energy (DUK), a utility.

RSI is considered overbought when above 70 and oversold when below 30. These traditional levels can also be adjusted to better fit the security or analytical requirements. Raising overbought to 80 or lowering oversold to 20 will reduce the number of overbought/oversold readings. Short-term traders sometimes use 2-period RSI to look for overbought readings above 80 and oversold readings below 20.

Overbought-Oversold

Wilder considered RSI overbought above 70 and oversold below 30. Chart 3 shows McDonalds with 14-day RSI. This chart features daily bars in gray with a 1-day SMA in pink to highlight closing prices because RSI is based on closing prices. Working from left to right, the stock became oversold in late July and found support around 44 (1). Notice that the bottom evolved after the oversold reading. The stock did not bottom as soon as the oversold reading appeared. Bottoming can be a process. From oversold levels, RSI moved above 70 in mid September to become overbought. Despite this overbought reading, the stock did not decline. Instead, the stock stalled for a couple weeks and then continued higher. Three more overbought readings occurred before the stock finally peaked in December (2). Momentum oscillators can become overbought (oversold) and remain so in a strong up (down) trend. The first three overbought readings foreshadowed consolidations. The fourth coincided with a significant peak. RSI then moved from overbought to oversold in January. The final bottom did not coincide with the initial oversold reading as the stock ultimately bottomed a few weeks later around 46 (3).

Like many momentum oscillators, overbought and oversold readings for RSI work best when prices move sideways within a range. Chart 4 shows MEMC Electronics (WFR) trading between 13.5 and 21 from April to September 2009. The stock peaked soon after RSI reached 70 and bottomed soon after the stock reached 30.

Divergences

According to Wilder, divergences signal a potential reversal point because directional momentum does not confirm price. A bullish divergence occurs when the underlying security makes a lower low and RSI forms a higher low. RSI does not confirm the lower low and this shows strengthening momentum. A bearish divergence forms when the security records a higher high and RSI forms a lower high. RSI does not confirm the new high and this shows weakening momentum. Chart 5 shows Ebay (EBAY) with a bearish divergence in August-October. The stock moved to new highs in September-October, but RSI formed lower highs for the bearish divergence. The subsequent breakdown in mid October confirmed weakening momentum.

A bullish divergence formed in January-March. The bullish divergence formed with Ebay moving to new lows in March and RSI holding above its prior low. RSI reflected less downside momentum during the February-March decline. The mid March breakout confirmed improving momentum. Divergences tend to be more robust when they form after an overbought or oversold reading.

Before getting too excited about divergences as great trading signals, it must be noted that divergences are misleading in a strong trend. A strong uptrend can show numerous bearish divergences before a top actually materializes. Conversely, bullish divergences can appear in a strong downtrend - and yet the downtrend continues. Chart 6 shows the S&P 500 ETF (SPY) with three bearish divergences and a continuing uptrend. These bearish divergences may have warned of a short-term pullback, but there was clearly no major trend reversal.

Failure Swings

Wilder also considered failure swings as strong indications of an impending reversal. Failure swings are independent of price action. In other words, failure swings focus solely on RSI for signals and ignore the concept of divergences. A bullish failure swing forms when RSI moves below 30 (oversold), bounces above 30, pulls back, holds above 30 and then breaks its prior high. It is basically a move to oversold levels and then a higher low above oversold levels. Chart 7 shows Research in Motion (RIMM) with 10-day RSI forming a bullish failure swing.

A bearish failure swing forms when RSI moves above 70, pulls back, bounces, fails to exceed 70 and then breaks its prior low. It is basically a move to overbought levels and then a lower high below overbought levels. Chart 8 shows Texas Instruments (TXN) with a bearish failure swing in May-June 2008.

Trend ID

In Technical Analysis for the Trading Professional, Constance Brown suggests that oscillators do not travel between 0 and 100. This also happens to be the name of the first chapter. Brown identifies a bull market range and a bear market for RSI. RSI tends to fluctuate between 40 and 90 in a bull market (uptrend) with the 40-50 zones acting as support. These ranges may vary depending on RSI parameters, strength of trend and volatility of the underlying security. Chart 9 shows 14-week RSI for SPY during the bull market from 2003 until 2007. RSI surged above 70 in late 2003 and then moved into its bull market range (40-90). There was one overshoot below 40 in July 2004, but RSI held the 40-50 zone at least five times from January 2005 until October 2007 (green arrows). In fact, notice that pullbacks to this zone provided low risk entry points to participate in the uptrend.

On the flip side, RSI tends to fluctuate between 10 and 60 in a bear market (downtrend) with the 50-60 zone acting as resistance. Chart 10 shows 14-day RSI for the US Dollar Index ($USD) during its 2009 downtrend. RSI moved to 30 in March to signal the start of a bear range. The 40-50 zone subsequently marked resistance until a breakout in December.

Positive-Negative Reversals

Andrew Cardwell developed positive and negative reversals for RSI, which are the opposite of bearish and bullish divergences. Cardwell's books are out of print, but he does offer seminars detailing these methods. Constance Brown credits Andrew Cardwell for her RSI enlightenment. Before discussing the reversal technique, it should be noted that Cardwell's interpretation of divergences differs from Wilder. Cardwell considered bearish divergences as bull market phenomenon. In other words, bearish divergences are more likely to form in uptrends. Similarly, bullish divergences are considered bear market phenomenon indicative of a downtrend.

A positive reversal forms when RSI forges a lower low and the security forms a higher low. This lower low is not at oversold levels, but usually somewhere between 30 and 50. Chart 11 shows MMM with a positive reversal forming in June 2009. MMM broke resistance a few weeks later and RSI moved above 70. Despite weaker momentum with a lower low in RSI, MMM held above its prior low and showed underlying strength. In essence, price action overruled momentum.

A negative reversal is the opposite of a positive reversal. RSI forms a higher high, but the security forms a lower high. Again, the higher high is usually just below overbought levels in the 50-70 area. Chart 12 shows Starbucks (SBUX) forming a lower high as RSI forms a higher high. Even though RSI forged a new high and momentum was strong, the price action failed to confirm as lower high formed. This negative reversal foreshadowed the big support break in late June and sharp decline.

Conclusions

RSI is a versatile momentum oscillator that has stood the test of time. Despite changes in volatility and the markets over the years, RSI remains as relevant now as it was in Wilder's days. While Wilder's original interpretations are useful to understanding the indicator, the work of Brown and Cardwell takes RSI interpretation to a new level. Adjusting to this level takes some rethinking on the part of the traditionally schooled chartists. Wilder considers overbought conditions ripe for a reversal, but overbought can also be a sign of strength. Bearish divergences still produce some good sell signals, but chartists must be careful in strong trends when bearish divergences are actually normal. Even though the concept of positive and negative reversals may seem to undermine Wilder's interpretation, the logic makes sense and Wilder would hardly dismiss the value of putting more emphasis on price action. Positive and negative reversals put price action of the underlying security first and the indicator second, which is the way it should be. Bearish and bullish divergences place the indicator first and price action second. By putting more emphasis on price action, the concept of positive and negative reversals challenges our thinking towards momentum oscillators.

Using with SharpCharts

RSI is available as an indicator for SharpCharts. Once selected, users can place the indicator above, below or behind the underlying price plot. Placing RSI directly on top of the price plot accentuates the movements relative to price action of the underlying security. Users can apply "advanced options" to smooth the indicator with a moving average or add a horizontal line to mark overbought or oversold levels.

Suggested Scans

ERSI Oversold in Uptrend: This scan reveals stocks that are in an uptrend with oversold RSI. First, stocks must be above their 200-day moving average to be in an overall uptrend. Second, RSI must cross below 30 to become oversold.

RSI Overbought in Downtrend: This scan reveals stocks that are in a downtrend with overbought RSI turning down. First, stocks must be below their 200-day moving average to be in an overall downtrend. Second, CCI must cross above 70 to become overbought.

Further Study

Book: New Concepts in Technical Trading Systems by Welles Wilder. From the creator, this book features a chapter on RSI that discloses the formula and five things RSI can tell us. This classic also covers the Parabolic SAR, the Average Directional Index (ADX), Average True Range (ATR) and more.

Book: Technical Analysis for the Trading Professional by Constance Brown. Brown takes RSI to a new level with bull market and bear market ranges, positive and negative reversals, and projections based on RSI. Some methods of Andrew Cardwell, her RSI mentor, are also explained and refined in this book.

Read more »

Forex Daily Pips

I'm short from 1.2176 sl: 1.2265. I took the position Friday
morning around 8AM EST. I wanted to trail the stop, but
fell asleep because of whacky sleeping patterns last week.
Luckily price didnt suddenly reverse on me through my stop
again. I'm thinking about moving the s/l asap to 1.2170, about
breakeven. I'll cover on another bounce around 1.1205 area,
but I'd like to leave the trade open and hopefully make some
decent gains on a break below 1.2060 area. I wish I wouldve
gotten in earlier, but have been focusing on the GBPUSD and
USDCHF lately.

Is anybody in this trade?

What do you think about moving my stop to 1.2170? Too tight?
I placed it here because I'm thinking there is at least two levels
of resistance from where we are now on Fri close @ 1.2124:
1)1.2140 Fri high after bounce from 1.1203 (near Fri low) and ~50%
fibo from Friday high to 1.1203
2)just above 61.8% fibo (1.2159)of 1.2213->1.2077) and a prior intraday
support for Friday

If it breaks these, then I will wait until a break of 1.2213 to glong
or play smaller fibos to look for small pip gains until there is a clear
direction??

I want to be in a somewhat of a decent position just in case if it
breaks out of this daily consolidation. I might be able to re-enter
on a bounce of 1.1205 area and back down off of 1.2200 area. What do you
think of my reasoning?

How can I improve this type of fibo support/resistance analysis ... maybe with some indicators? I noticed the intraday and daily double tops and headandshoulders, btw, but didnt mention them. Both are trend reversal signals, so it is a high probality we will see more downside, but it's still kind of iffy as to when for me.

Admin,

Forex Analysis.

Gowtham.

India.

Read more »

AUD/USD Technical Analysis Forex

AUD/USD to Show Weakness Ahead?

By: Andrei Tratseuski

The progress of the AUD/USD currency pair has been stalled significantly. The pair dropped from roughly 1.10 to below parity, thereafter, rebounding to a 1.06 level. However, currently the currency pair is having a hard time of appreciating as plenty of resistance can be noted.

The AUD/USD currency pair is hovering below pivotal moving averages. The 20-period, the 50-period, and 100-period Simple moving averages are all above the currency pair. In the matter of fact, the AUD/USD currency pair is nearly breaching the 200-period simple moving average. A break below a 1.04 level could further put the AUD/USD currency pair in a downward trend. Currently, the resistance is staggered at 1.4050 which is represented by 20-day simple moving average. The level also coincides with a falling wedge formation (represented by blue lines). A break of resistance could possibly push the currency pair to a 1.06 level.

Currently, a Relative Strength Index (RSI) divergence is negatively hindering the currency pair (orange lines). It is hard to anticipate any meaningful rebound in the currency pair, unless RSI gauge will become favorable. Furthermore, the RSI indicator rose too quickly after a rebound and may stall as it approaches an ever important 70 mark. If a 70 mark of the RSI indicator is not breached, a further potential drop could be staggered.

On support side, a long-term ascending line keeps a trend to the upside. The line is structuring its presence near parity. A break below parity could severely hinder the price action of the AUD/USD currency pair. A timid pullback is currently expected, with a parity level being the most crucial component. A pullback to a parity level will need help on the fundamental front. A loss of risk appetite and reversion back to the risk aversion could help extradite the process.

Read more »

Don’t panic : SpeakAsia website not working

SpeakAsia website is down from 21st august. Same problem occured on 14 august. So no problem this is only technical problem. Website is under EOW. So please I request you to all don’t panic. SpeakAsia team will request EOW to let them allow to work on this specific problem, if EOW allows then same then the site would be up soon.

The transaction log is the part of the database to which the SQL Server writes all transactions before writing them to the database. A transaction can be either one change to the database or a series of related changes that the SQL Server must complete either together or not at all. Except for some non-logged operations, such as a fast bulk copy of data into a table, the log records every transaction. This lets you recreate the sequence of changes to the database should there be a system crash or other problem.

This log keeps your data consistent by guaranteeing that the SQL Server either applies all the changes that are part of the transaction or none of the changes. If the system or disk crashes, the transaction log lets you recover the database to its previous state. You recover the database by restoring your most recent full backup, then applying all changes recorded in the log since that backup.

Truncating the Transaction Log

If log records were never deleted from the transaction log, the logical log would grow until it filled all the available space on the disks holding the physical log files. At some point, old log records no longer necessary for recovering or restoring a database must be deleted to make way for new log records. The process of deleting these log records to reduce the size of the logical log (not physical) is called truncating the log. Truncation of the transaction logs will only occur during execution of the checkpoint statement, which happens nightly during backup of SQL databases (SQL 2005).

I’m guessing that SpeakAsia Techinical Team are not doing log backups becuase Server is under EOW.

Read more »

SpeakAsia Online Eow India Star News Kirit Somayya

Dear Friends,

Jo Bangladesh Bharat ki help se aazad hua usse speakasia ka concept itni jaldi samajh mein aa gaya aur Bharat ko jisne SPEAKASIA se tax bhi wasoola usse samajhne me itni der kyo.

1-Agar Bharat Sarkar ko concept samajh mein nahi aaya to SPEAKASIA se tax kyo liya?

2-Agar concept samajh mein aa gaya hai to Registration mein itni der kyo?

3-Agar SPEAKASIA paise dena chahti hai to Bharat Sarkar ko kya problem hai?

4-Jo companies Bharat se paise lekar bhag gayi unke khilaf Bharat Sarkar ne kuch bhi kyo nahi kiya, aur agar kuch kiya to paise kyo nahi mile?

5-Agar Bangladesh mein company kaam kar sakti hai to Bharat mein kyo nahi?

6-SPEAKASIA k owner Indian hai to unhe hamare constitution k anusaar Bharat mein kahi bhi niwas,business,aur ghumne ki aazadi hai,to company par itni pabandi kyo?

7-Agar Media k pas company k khilaf saboot hai to wo kya hai?

8-Agar Media ki baat par government ne action liya hai aur Media sahi hai to Media aur Bharat ki Janta ki deemand par JANLOKPALL BILL government kyo nahi parit karti?yaha par Media galat kaise ho gayi?

9-Agar EOW k pas SAOL k khilaaf koi bhi proof nahi hai to dusri baar Tarak Sir ko arrest karne ki kya wajah hai?

10-Agar RBI ya Bharat Sarkar SAOL ko paise nahi dene degi to paise milne mein deri ki wajah se aisi bahut si complain aayegi.

11-kya wajah hai ki Tarak Sir k jamanat par chutne k bad dusri complain mili jail mein rahne k samay kyo nahi mili.kya ye kisi ki saazish hai?

Read more »

Heartiest Greetings to all SPEAKASIANS Scam...!!?

Hope all of you are doing well

I noticed a lot of foul words/allegations and negative comments against OUR COMPANY….We are welcome for every discussion but let me remind all members here that this is not a rough exercise book or a slambook where they can post anything they desire or wish.
I ask such people what could they have done if the company had run away on 12th of May,2011 itself.I expect an answer from such Members!!
Besides this, if all such Members don’t have any expectations left then they should KINDLY leave the group and get a life of their own.So that all of us can live in peace.

Let me assure and remind you of a fact : The only source where we can get our subscription and earned money is “SPEAKASIA”.No TV Channel or even the Government is going to return a single penny of ours.Let us be assured that the company is not leaving any stone unturned to do so.
Ladies & Gentlemen,our accounts have been frozen, we are not allowed to hold meetings,we are not allowed to pay money to the vendors and what not.
But,the company is fighting against all these issues very bravely despite suffering huge losses on all fronts.
I agree that it has been more than 3 months today that we have been waiting for our deserved income and we are frustrated because of the same, but what needs to be understood is this is exactly what our enemies/competitors/politicians want.They want us to go against our company,loose all our hopes,make complains,lodge FIRs and FINALLY leave the company alone and stranded so that they are left with nothing to fight for.
Sadly,we are doing exactly what our enemies want.

Agar aaj tak logon ko ye nahi samajh aaya hai ki SPEAKASIA kahin nahi jaana chahti hai toh sach main unko samjhana sirf bevkofi hi hogi.

Let us continue to be patient and wait and support our company for SPEAKASIA needs our support.It is a tough time indeed but let us proof today that :
“When the going gets tough,the TOUGH gets going”

Regards,
SACHIN GOYAL
A Proud SPEAKASIAN

Read more »

USD/CAD trend Stichostick Indicator

Aaaand AUD/USD takes the cake again! All the commodity currencies made pretty strong moves last week, but there can only be one winner of the Best Setup of the Week. Let's give happy snaps to those who caught this 15:1 trade on AUD/USD!

Best Setup for the Week

Just when I was about to crown my long usd/cad trade as the "Best Setup for the Week", I took a quick glance at all the comdoll charts and noticed that AUD/USD provided an even better risk aversion play. But hey, my win with USD/CAD ain't too shabby so better stay tuned for my trade update coming soon!

Anyway, I realized that AUD/USD's move was even stronger and bigger as it made a 250-pip drop on Wednesday. Talk about a midweek reversal, huh?

That was the time when Morgan Stanley announced that the us and euro are both dangerously close to a session, so you can imagine how much traders panicked then. That was also the time when a huge bearish trend materialized on AUD/USD's 1-hour chart, just when the pair topped at the 1.0600 handle.

Had I shorted there and used a 50-pip trailing stop all the way down to 1.0350, I would've made a 5:1 trade. Even better, if I added to my position every 50 pips, I would've upped my reward to risk ratio to 15:1. Now that would've been cuh-razy!

Were you guys able to catch this trade? If so... Why didn't you tell me?!?

I'm kidding, haha. Well, sort of. If you wanna help this young lady trader catch more pips in the comdoll arena, you know where to find me:

See you around!

What Moved the Comdolls Last Week?

The comdolls started last week with a bang as traders flocked to high-yielding currencies like the Aussie and the Loonie. Of course, it definitely helped the comdolls that new motor vehicle sales reports from both Australia and Canada registered dramatic improvements. Australia's report showed an 8.6% increase in July from its 1.9% growth in June, while Canada's data also improved from a 6.1% decline in May to a 10.8% rise in June. Nice!

Around the middle of the week the comdolls showed mixed results against the U.S. dollar while investors tried to get a read on RATE in markets. Still, all the waiting didn't stop commodity-producing countries from releasing economic reports. We saw the dovish RBA meeting minutes and steady wage leading index from Australia; weak leading index, foreign securities purchase and wholesale and manufacturing sales from Canada, and a slight improvement in New Zealand's credit card spending in July.

By the end of the day (or the week in this case), the comdolls were still at the mercy of risk appetite. Comdoll price action sharply went downhill when both the existing home sales AND the Index from the U.S. badly missed expectations. What's more, concerns on the possibility of a debt contagion in the euro zone escalated.

Oh, and have I mentioned that Morgan Stanley, a big player in the banking industry, downgraded its global growth forecast? It's no wonder traders dumped the comdolls in favor of its low-yielding counterparts!

Not all traders shifted their money to currencies though. On Friday RISK in markets got so bad that gold, a favorite safe-haven, reached new record highs at $1, 8880 per ounce. At the time the comdolls continued to take hits in markets and fell for the second or the third day in a row against the dollar. In fact, investors even dragged USD/CAD back above 1.0850 after the positive CPI was released. I should know - my adjusted stop loss on my USD/CAD got hit!

Whew! Last week was definitely a roller coaster ride for the comdolls! Will next week be as eventful? Do you think that gold will reach $2,000 before the month ends? Or will risk appetite pave the way for some correction in our charts?

I can't wait to hear what you guys think! As always, you know where to reach me:

Till tomorrow for my best comdoll setup!

• Currently 5/5
• 1
• 2
• 3
• 4
• 5

Rating: 5/5 (2 votes cast)

Read more »

How to get Success In Forex Market?

Before I reveal how you could have caught FIVE 2:1 trades, you might wanna check out out my weekly winner to give you a better idea of what my framework is all about.

August 15 to August 19, 2011: GBP/JPY Price Action Review

The pound was large and in charge at the start of the week as it climbed up from the weekly open and never looked back! A healthy risk appetite and a higher-than-expected reading from the U.K. CPI report saw GBP/JPY climb past the 126.00 MaPs. But after that, things got a bit... well, weird.

On Wednesday, price steadily declined as markets anticipated the release of employment data and MPC meeting minutes. The releases were initially very bearish for the pound. And why wouldn't they be? No one was expecting to see such a drastic rise in unemployment (7.7% to 7.9%).

But just as quickly as price dropped at the sight of these results, the pair turned back up to climb to a new high. Finding support at 125.50, the pair managed to hold its ground despite very bearish results as risk appetite buoyed the pound higher. The move didn't make sense to a lot of traders, including yours truly, especially since the MPC just did something that it hadn't done in a long time- unanimously agree to hold interest rates steady.

From then on, it was pretty much smooth sailing for the pound. It found supporting at the 126.00 handle, while finding resistance at the upper WATR. Here it remained range-bound until the end of the week.

I think by now you know the setup that I've been raving about. Yes, that perfect range over the second half of the week!

As you can see, the range held like a charm and kept price in check five times, and on two of those occasion, Stochastic chimed in with divergences!

Shorting at the WATR (or going long at the 126.00 MaPs) while using a stop of 40 pips would've been just enough to land us 2:1 winners each and every time, supposing we had taken profit at the 126.00 MaPs (or WATR). It was practically a pip-making machine!

So, were any of you guys able to catch this bad boy?

Did you trade the range on GBP/JPY last week?

Yes, and I made mad money on it!No, I traded GBP/JPY earlier in the week.No, I was too busy trading other pairs.No, but I did join you on that EUR/GBP long trade!

VoteView ResultsShare This

• Currently 5/5
• 1
• 2
• 3
• 4
• 5

Rating: 5/5 (1 votes cast)

Read more »