Trend Continuation Following a Reversal Candle on GBP/USD 14/07/2010
Today we took a nice long on the GBP/USD for +40 pips. Overall it was really slow European and NY session, which required a lot of patience to wait for the proper trade setup. However after an hour and a half of waiting for this setup we finally had a good trade. Overall the market had been trending up so we were waiting for the proper retracement to get in with the overall trend. We finally got that setup when everything (EUR/USD, GBP/USD) came down to a nice support level and gave a solid reversal candle formation marked by the arrow on the left.
We waited for the market to not only close as a intra-day reversal candle pattern, but I wanted to see some buying pressure before going long. A few candles later we had just that, the market gave the reversal candle and then was followed by a couple bullish candles. The second arrow points to the candle that gave us a little pullback for an entry long. This is very important….the market showed up its direction with the reversal candle and then the bullish candle following that. Almost always after a change in direction similar to this, the market will make one last pullback (in this case down) before continuing up in the direction of the forex trend reversal signal.