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The gbp/usd is in an up trend supported by the rising trend line. The price pulls back towards the rising trend line while the Stochastic Oscillator turns positive from oversold market readings (below 20). We open a long buy at 1.5590 with stop 3 pips below the most recent level of support at 1.5590. Our trade objective is 50% of ATR which is 75 pips. The trade was closed about 4 candlesticks later at 1. 5690 for 75 pips while the risk was only 25 pips (+ spread). Rules for a Short Trade 1. Find a down trending market and draw a falling trend line connecting the successive temporary resistance tops. 2. Wait for the price to rally towards the falling trend line. 3. Go short in the vicinity of the falling trend line if the Stochastic Oscillator turns negative from overbought market conditions. 4. Place stop 3 pips above the most recent level of resistance. Trade objective: 50% of 14 day average true range (ATR).
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