Trade Idea: 2012-8-15 23:48
Although my swing trade on EUR/USD (I closed it at breakeven) didn’t turn out as well as I hoped it would, that’s not keeping me from considering another swing trade. This time though, I’m looking at GBP/USD. But before anything else, I gotta give Big Pippin’ a shout out as big as his do for this trade idea which he featured in today’s Chart Art.
An ascending triangle has materialized on GBP/USD with the pair making higher lows but constantly getting rejected around the 1.5730 area. I know that the chart pattern is usually taken as a bullish signal. However, the past two candles have closed as dojis and have made me reconsider buying the pair.
So this is what I’m going to do: WAIT. I will sit on the sidelines and wait for confirmation before pulling the trigger. My plan is to go long once a bullish marubozu closes above the resistance level (around 1.5750) but I will short the pair once I see that support at the rising trend line has been broken.
The upcoming U.K. retail sales will probably determine where the pair will go. After all, historically speaking, price action tends to have a positive correlation with the results.
If the U.K. retail sales comes in better than expected, the ascending triangle will probably break out to the upside. On the other hand, if it comes in worse than expected, resistance will most likely hold and GBP/USD will sell off.
In any case, I’m prepared for both scenarios. I’ll be sure to update ya’ll through my Facebook, Twitter, and Google Plus accounts on what I’ve decided to do.