GBP/USD: Eyeing A Bounce At the Rising Trend Line

Trade Idea: 2013-5-8 3:30 am EST

GBP/USD 1-hour Chart

After observing Cable’s price action for a few days, I have finally formulated a plan to trade it. As you can see from my chart annotations, the pair has been making “higher lows” and “higher highs,” which suggests that the bulls are in control.

Using the trusty Fibonacci tool, I’ve determined that the 61.8% level is a good entry point as it nicely lines up with the rising trend line. I’m not going to jump in immediately though. Given my recent string of losses, I’ll be more conservative and only enter when reversal candlesticks appear.

I’m ultimately aiming for the 61.8% Fibonacci extension level, but I’ll take half my position off at the former highs. As for my stop, I’ll place it below the rising trend line and the 61.8% Fibonacci retracement level, at 1.5300.

Now let me talk a little bit about the fundamentals.

In case you’ve been busy planning an epic summer trip, quite a handful of reports from the U.K. topped expectations.

For instance, the U.K. GDP report posted a 0.3% uptick for Q1 2013 despite forecasts that it would enter a triple-dip recession. PMI reports across the major sectors from construction, manufacturing, to services also came in better than expected.

I think that we will see the positive vibes brought about by these reports be reflected in the BOE‘s rate statement tomorrow. If Mervyn King sounds more optimistic about the economy or if we see that there are fewer MPC members who see a need for an increase in asset purchases, the pound could rally.

Oh gosh. I really hope this trade ends my losing streak. Wish me luck!

XOXO,

Huck

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  • harel

    you should read comments about your trades and that will help you to avoid losses as i said on the USD/JPY trade.

    ok, never mind that, i’m with you on the long GBPUSD but i will enter at 1.54(50% retracement) without waiting for candle confirmation or whatever you call that(probably you lost confidence) and hopefully TP at 1.5750 as it’s the 61.8% for the longer term

    good luck to us

    • harel

      trade abort for now.

  • akshay bhujbal

    hey, i am with you on this one. i entered at 5375 … sl 5275. and tp previous tops…..i really hope this trade turns out to be a winner.

    by the way, the bullish trend line still holds, and long term support on weekly tf @ 5350 also hold. . I wish to see bullish engulfing on daily tf on Monday to confirm the reversal….good luck.

  • harel

    you should read comments about your trades and that will help you to avoid losses as i said on the USD/JPY trade.

    ok, never mind that, i’m with you on the long GBPUSD but i will enter at 1.54(50% retracement) without waiting for candle confirmation or whatever you call that(probably you lost confidence) and hopefully TP at 1.5750 as it’s the 61.8% for the longer term

    good luck to us

    • harel

      trade abort for now.

  • akshay bhujbal

    hey, i am with you on this one. i entered at 5375 … sl 5275. and tp previous tops…..i really hope this trade turns out to be a winner.

    by the way, the bullish trend line still holds, and long term support on weekly tf @ 5350 also hold. . I wish to see bullish engulfing on daily tf on Monday to confirm the reversal….good luck.