Trading Setups / Chart in Focus:

GBPUSD

The Sterling / Dollar fakey and pin bar setups that we’ve been discussing since last Friday have come off nicely to the downside over the last two days. These signals were clear and obvious and formed at a core resistance level.

Many of the forum members netted a nice 3 to 1 winner off this reversal signal, including myself. We’ve been covering the potential for a reversal since last Friday’s commentary where we first discussed the pin bar / fakey setup at resistance. Activity in the forum was buzzing and many of my members worked together confirming the strength and validity of this setup.

Note that price has now moved into support near 1.6250, beyond this we see support coming in near 1.6150 – 1.6100.

USDJPY

In last Friday’s commentary we also covered the false break of core support near 76.30 in the USDJPY. Note that this support has held firm and price has now closed above the 21 day EMA. I am personally long on that false break signal setup, it’s a cheeky trade but it has worked out due to the “vacuum” effect in play after most of the market got stopped out on the false break. There’s potential for a move up toward the 80.00 resistance level if this market can get some legs behind it.

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Forex Commentary:

The dollar rose on Thursday and stocks slumped as investors shied away from risky trades amid speculation that Federal Reserve chief Ben Bernanke will not hint at new plans to stimulate the economy this week.

The euro fell 0.2 percent to $1.4380, though it recovered from a global session low of $1.4325.
The dollar rose to 77.48 yen, up 0.7 percent. It hit a record low beneath 76 yen last week. The dollar also hit a one-week high just shy of 0.8000 Swiss francs before easing to 0.7932 francs, down 0.3 percent

Other Markets:

On Wall Street today U.S. stocks fell as investors switched to cash ahead of an important speech from Fed chairman Ben Bernanke tomorrow.

The Dow lost 170.89 points, or 1.51 percent, the S&P 500 lost 18.33 points, or 1.56 percent, and the Nasdaq dropped 48.06 points, or 1.95 percent.

Upcoming important economic announcements: 8/26/2011

4:30am EST: Britain – Revised GDP q/q
5:30am EST: Switzerland – KOF Economic Barometer
8:30am EST: United States – Prelim GDP q/q
10:00am EST: United States – Fed Chairman Bernanke Speaks