Forex Trade Idea: GBP/USD Pullback in the Works?

Hey, guys! I spotted a potential swing trade on GBP/USD. What do you think about Cable’s chances of extending its downtrend?

The BOE could set the stage for more pound losses tomorrow after it releases its monetary policy decisions. No one is expecting any policy changes, but we could hear a word or two from the central bankers.

As mentioned in Forex Gump’s piece this week, market players will pay close attention to the BOE’s concerns over inflation and employment as well as its increasingly dovish stance.

GBP/USD: 1-Hour Forex Chart

GBP/USD: 1-Hour Forex Chart

On a technical basis Cable has just bounced from the 1.4400 major psychological area on the back of improvement in risk sentiment. Since there’s no clear catalyst for a reversal, I’m looking for an opportunity to jump in on the downtrend.

Right now I’m looking at the 1.4550 to 1.4650 area for my entry levels. After all, they’re near an area of interest and a couple of Fib levels. I’m placing my stops above the SMAs and place my profit targets at around 1.4250, near a bottom back in 2010.

Here’s what I’m planning for this setup:

Short quarter position at 1.4550, max stop at 1.4850, profit target at 1.4250

Short quarter position at 1.4650, max stop at 1.4850, profit target at 1.4250

What do you think? Will we see more losses from the pound soon? Let me know if you also have plans on trading this setup!

XOXO,

Huck

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