|Screenshot taken on 24 Sept 2010, a good set up to enter Short Sell EurGbp|
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FX instructor Richard Krivo has nicely identified how indicator RSI supported by a Engulfing Candlestick pattern can increase the successful probability of your trade.
The rule is simple: For Short Trade, wait until the RSI is above 70 zone and then look for a bearish engulfing candle to close with the RSI closing out of that overbought zone, and/or RSI establishing lower high. Apply conversely for Long Trade.
Look at the screenshot I just prepared today 24 Sept 2010, you will understand, clear and simple. Today we have a good set up to enter Short EurGbp, Elliot Wave Theory support this trade as well, the pink arrows indicate we are going into the final Wave (5th Wave) with target is somewhere around 0.75
(Click on the picture to zoom in)
... and why am I picking this 0.75 target, look at the AB=CD rule on decending triangle on weekly set up on the left,... AB=CD pattern is one among Harmonic Patterns which is used widely in Technical analysis nowadays due to it's high successful rate. For a historical rate statistic, read the Best Harmonic Pattern.