Big Pippin did me a huge favor today when he pointed out a strong support at Cable’s 1.6740 area. On the 4-hour chart the pair looks like it’s on a descending triangle. But according to the School of Pipsology, descending triangles may sometimes break to the upside.
On the fundamental side the U.K. economy is still one of the best choices in the “search for yields” game. Despite a few data misses, the economy has shown its bright spots. Heck, I still can’t get over missing the volatility from the U.K.’s stronger-than-expected employment report! Meanwhile, the dollar is having trouble making new highs against its counterparts due to low volatility and the Fed’s lack of motivation to speed up its tapering program.
This is why I entered at market (1.6833) and risked 0.50% of my account around the U.K. session open when price closed just above the 200 SMA on the 4-hour chart. I placed my stop loss 100 pips away with at least a 1:1 risk ratio. I think an upside breakout could lead to at least the 1.6900 handle unless we see major catalysts over the next couple of days.
I’m not planning on making adjustments yet but any suggestion would be most welcome!