Remember that range setup that we looked at last week? Well, the pair has broken above the pattern since. This time I’m looking at jumping on Cable’s uptrend. What do you think of this forex setup?
As you can see on the chart above, Cable has been trading on a rising channel since mid-August. This week it found support at the 1.3300 major psychological handle and weekly open price. Coincidentally, the level also lines up with a 38.2% Fib and mid-channel support on the chart. Last but not the least, there’s a yummy bullish divergence on the 4-hour time frame.
Last week I’ve mentioned how a range bounce isn’t sitting well with me because of the pound’s fundamental picture. Well, this one lines up a bit more nicely with the techs! See, a long GBP/USD trade supports speculation that the Fed’s September meeting won’t result in a rate hike. On the pound’s side, there’s still little evidence (so far!) that the Brexit vote has affected the U.K.’s economy negatively. Until we see more reports, Cable will most likely continue on with its uptrend.
I’m planning on buying at a retest of the weekly open price and another buy order around the 1.3200 channel and SMA support. My stop loss will just below the channel at 1.3150 and I’ll be aiming for 1.3500 initially.
Here’s my game plan:
Position 1: Long at 1.3300
Position 2: Long at 1.3200
Stop loss at 1.3150
Initial profit target at 1.3500
What do you think? Will Cable extend its gains in the next couple of trading sessions? What would you do if this were your trade? Any advice would be appreciated!