This is a video summary of the Live Forex Trading Room session on August 30, 2007.

Today’s Summary:

Although it has been the last days of August, a very slow time for the market in general, we had an interesting day with several nice moves on GBP/USD and GBP/JPY.

GBP/USD was left yesterday with an uptrend on the pair, and going to the daily chart, we were anticipating some downmove before a bullish reversal would take place. Plotting two fib projections -a Fibonacci Fan and Fibonacci Retracement, we expected the price to retest the 38.2 level at around 2.0032, which we saw as a good entry point for a Long trade. We entered this trade after receiving confirmation. As we mentioned yesterday, it would be imperative that prices go down to test the 2.0033 level, and today it reached 2.0042 at its lowest point, which created a spike indicating some very good support at this level, which corresponds to the 61.8 level of the fib fan, and 38.2 level of the fib retracement. It is also resting upon the rising uptrend line connecting the previous lows.

We went into this trade at 2.0077 with a 3 lot trade. Two of the lots were closed off at the 2.0122 level, upon the breach of the 50% fib level. With an hourly close right above, we moved our stop for the 3rd lot to 2.0120 where it corresponds to the invalidation area of the upmove - if the price gets to reach this point, then the trendline becomes invalid, and we lock in 50 pips or so of profit, in addition to the previous 2 lots. All in all a very good trade.

On GBP/JPY, we were anticipating a nice upmove, though daily fib fans suggest we are being held at the price’s current level of 233.96, and upon the failure to breach the fib fan level, we initated a short position at 233.64. The pair is now trading at 233.22. If we have a close below the 76.4 fib level, we have a greater chance of catching further pips on the move down.

We follow a very simple straetgy on the GBP/JPY - Divergence. As we did in yesterday’s recap, we are once again anticipating a nice Bullish Divergence on the 5 minute charts, with the stochastics forming a lower low, and price forming a higher low.  The reversal will likely take place in the oversold area, and we will flatten our Short position at that level, and initiate a new Long trade.

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