I’ve been looking for a way to GBP/USD since the start of the week and I finally found an opportunity just before the NFP report!
On the technical side GBP/USD is seeing a nice retracement after the U.K.’s construction PMI report came out worse-than-expected. Price is almost at the 1.6850 minor psychological handle, which is also near the 100 SMA, 61.8% Fib, and a previous resistance area on the 1-hour time frame. Oh, and Stochastic is also almost in the oversold zone!
Fundamentally I’m also bullish on the pound. A quick check showed that Cable had risen by at least 50 pips when the NFP report came out better-than-expected in March and then ranged a bit (before eventually rising) when the NFP numbers missed investor estimates in April. It also doesn’t hurt that the U.K. has been printing enough positive reports to keep the flame alive for BOE rate hike speculations.
This is why I’m planning to buy Cable after the NFP report. If the report inspires risk appetite I could probably buy somewhere around 1.6850 with a 100-pip stop and my profit target at 1.7000. I could also enter at market after the initial move and keep a tight trailing stop. If we see risk aversion though, then I might wait for a bit of consolidation and a couple of bullish candlesticks before I jump in.
What do you think of my plans? Anyone else trading this setup?