Trade Setup: Jumping in on GBP/USD’s Uptrend!

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?

GBP/USD: 4-hour Forex Chart

GBP/USD: 4-hour Forex Chart

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!

Huck's Signature

Read the 5 lessons I’ve learned in 2015
Read the risk disclosure!

  • Steven Currie

    Huck,

    I would wait a couple/few more days before making a longer
    term trade on the GBPUSD. It hit the top on my daily & 4 hour charts late
    Monday, 9/6, and has gone down 155 pip since then. It has gone below the 200 EMA on the daily, and just touched on the H4 200 EMA this morning. The predictive neural network software I use also shows it in a downtrend for the immediate future.

    Stevecsd

    • You’re right, it looks like the bears are still in control despite the initial optimism for the pound. Did you short the pair? Do you think it’s still a good idea to short?

  • Pingback: Trade Update: Jumping in on GBP/USD's Uptrend!()

  • You’re right, that would’ve been a better entry even though the setup was eventually invalidated. Just have to be patient next time!

  • Nah, this particular setup didn’t work out. Good call though! Do you know why ascending channels are bearish signals? It’s contrary to most tech books I’ve read but it sounds interesting.