GBPUSD Daily Short setup

GBPUSD_Daily_11FEB09 – This is more of a trade watch idea as there are good arguements for a bounce off the current level, but I am biased to the short side.  That being said, I would be willing to go long for a retracement until the pair consolidates.

 The Daily chart shows price is sitting on a fibonacci confluence zone as well as bouncing on the top of the recently broken channel.  I believe fundamentally that the GBP is still set up to fall further.  The wildcard here is the actions of our happy congress and what ultimately gets passed, and how the market reacts to the massive debt load we will be incurring which has the very real possibility of leading to inflation, increased money supply and a falling dollar.  To confuse the long term outlook, the USD is being used as a flight to safety vehicle which has propped it up over the past few days.  Again, arguements can be made either way. 

 My plan is if the pair closes below the red confluence zone and channel, I will short it down to the .382 as an initial profit that is draw between the two confluence zones.  I will be looking for opportunities to stack and move my stops down.  I have taken some nice pips the past 2 days on the current shorts and am now in with a very small lot to try to build another possition if it breaks.  If we get taken out I’ll wait for a consolidation or break below. 

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