Whenever you are looking at a technical level, always ask yourself the following:
- Am I buying at a potential bargain/wholesale/discount price? (supply or demand zones) - Why is there more likely to be more supply/demand orders at that area? (new traders entering/traders taking profit at horizontal, diagonal & dynamic support/resistance areas) - What are the underlying fundamental/sentiment drivers that should push price in my favour? (interest rates, business cycle, risk on/risk off)
If all 3 are in your favour, take the trade, manage your risk and go for more than you've risked.
Always remember this trade is only 1 trade in the next thousand you're going to take.
I like it. Not sure if this is the right question but does price of one part of the pair increase with greater demand. So if there is more demand for GBP would that push up price against USD?
leonrowe
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@Captain_Walker, it really depends because there are a lot of moving parts in forex. There are moments when the gbp will strengthen (increase in demand or supply orders) against the usd but not against the euro or jpy for fundamental or sentiment reasons. gbp/usd pair may be rising in prise not totally because of gbp demand but because of usd supply (negative news event).
keep an eye on all gbp pairs and if demand is increasing on all/most of the gbp crosses you have a greater signal that there is a true increase demand for the gbp (or any currency) from a technical perspective.
hope i answered your question and thanks for asking.
Captain_Walker
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@leonrowe, Yeah. I tend to watch the whole flock of GBP pairs to get an idea where they're heading. :)