hussein.ahmed
Long

A pair that should be on your watchlist.

FX_IDC:GBPZAR   POUND STERLING / RAND
34 2 1
Important pairs like EURUSD             , USDGBP             and others are not very attractive for us at the moment, as they are all in consolidation and does not give us an opportunity to find a complete trend that we can ride either to the upside and the downside. In addition Euro             is fundamentally supposed to stay weak with the QE going, geo-political problems and Greece financial crisis so that suggests that we should stay out of such high risk investments.

Through out my scanning I found that GBP/ZAR has been trending very well to the upside since 2011, moving from 10.77 to almost 20. Which is a very nice compounding opportunity. For that, we want to catch an opportunity to ride the continuing uptrend.

Consolidation

This pair has been in consolidation since 2014 as prices have been capped in between the resistance of 18.80 and support of the round number 17.03.

Breakout
We waited for a break out to either the upside or the downside, and it finally did. Now we can see that prices breached the strong resistance that was met 4 consecutive times for prices to form a new resistance at the price of 19.60 almost hitting the 20 round number.

Zigzag
The zigzag pattern shown in the chart is a normal consolidation phase that comes after a long trending period after completing a five wave cycle. Now prices are trading above the 200 Day moving average, suggesting further upside momentum and a formation of a new Elliot wave cycle.

Where do we enter?
We want a confirmation that this breakout is valid and its not a false one, that might catch us in loses. For that we are expecting prices to find some re-testing. In other words we expect prices to fall again to re-test the support of 18.7907 (red dotted line) that was previous strong resistance. Price however, might fall further to the green dotted line at the 18.0116 round number which is the 61% fib level. Looking at previous price action of this pair, prices found support at the 61% fib level before it could continue moving in the direction of the trend.

So I suggest entering half of the position in the red dotted line zone, and the other half in the green dotted line zone, and wait for prices to reach the 20 round number and take profit 1 and continue towards the 22 round number.

I hope this strategy has helped you. Its important to trade without hassle and avoid day trading. Trading simply without many technical indicators makes it easier for us to see where prices are going.

Fundamentally

Fundamentally the US dollar             is expected to continue rising in the future. We will keep track of U.S. fundamentals and economic data, in order to forecast the probability of the fed rising interest rates in September. Rising rates in 2015 is a goal Janet Yellen is looking for, and it would surge the US dollar             to new levels.

HAPPY TRADING
TRADE SMART
I'm up for this one too. Waiting for round number 20.0 to be broken, perhaps also waiting for re-test. Then I'm in.
+1 Reply
hussein.ahmed MetricTrader
Thank you for your comment Metric Trader, I hope it works out well for both of us. I see you trade similarly as me. I personally dislike day trading, I prefer the investment approach without having to follow up with every market noise.
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