TRADE #2 OF STAGE 3: SHORT GBPUSD: ENTERED ON 1.27.2010: T1 HIT; STOP LOSS OUT FOR T2 AND T3; LOSING TRADE. SCORE 1 WIN 1 LOSS FOR STAGE 3

I have chosen to go short on the GBPUSD pair. A few weeks ago, I attempted to go short near the top of the channel on a 4 hour chart and as you can see on the chart, it was near the top, but I chose the wrong time to go short. The pair is now near the bottom of the channel and I am taking a short trade until the channel line is hit and looking for a little bit of an extension beyond that. I am expecting that as the USDX continues to travel higher denoting a stronger US Dollar. If you click on the second chart, you can see the entry point. Here are my reasons for entering this short trade: 1. The USD continues to rise in value. This is denoted in the USDX at www.ino.com 2. The 4 hour chart still shows the GBPUSD pair to be in a downtrend albeit near the lower channel line which could preclude a bounce to the upside. 3. On the 15 minute chart the Slow Stochastics are in the overbought region and on the 4 hour chart, the pair is below the 200 day EMA. I chose to make these trades tight and we shall see how this pans out.

UPDATE: 01 28 2010 This was a losing trade. The GBP for some reason has gotten stronger than the USD and the pair rose after I shorted it. I suspect this is all profit taking as the pair is nearing support via a trendlline on a 4 hour chart. Here is how it panned out: ENTRY SHORT @ 1.6136 T1 hit at 1.6110 for 26 pip profit T2 and T2 out at 1.6166 for 30 pip loss each (so that means a 60 pip loss since there were 2 contracts) Total loss for this trade was 34 pips.