GBPUSD 12-7-06

12-7-06

GBPUSD

The GBPUSD long trade from 12-5-06 was exited at 1.9719 yesterday. The sell off extended the big trading range lower to 1.9614. The big trading range is 1.9814 to 1.9614. There are several small areas of breakout demand and breakdown supply inside the big range to trade between today. This morning, the GBPUSD is back above 1.9700 and has an area of supply at 1.9723 and another area near 1.9750 ahead of it.
Since we are back to range trading, I will enter a short trade at 1.9722 with a sell stop once the GBPUSD trades above 1.9730 as long as it does not trade above 1.9740 first. If that happens, I will short the higher area of supply near 1.9750 instead. If the GBPUSD reaches 1.9750, I will enter the short trade at 1.9748 with a sell stop. My target to cover the short will be the breakout area of demand at 1.9670. The 1.9670 would be a good area to enter a long trade if the area of supply at 1.9723 is reached on a spike higher. It is also possible that the GBPUSD will base just below the 1.9700 area in which case the short trade at 1.9723 is out, and the 1.9750 short will have a target of 1.9693 as a place to cover. For now, the next long will be at 1.9670.