GBP/USD: Will the Pair Continue to Move Higher?

Trade idea: 2012-4-19 00:22

GBP/USD 1-hour Chart

Price action on GBP/USD has virtually been the same for the past couple of days. The pair pulls back a little bit, falling 30 to 40 pips from its opening price, before trading higher. In fact, if you connect its recent lows, you’ll have yourself a rising trend line. And since I have a strong feeling that GBP/USD will continue trending higher, I’m going long!

I’m expecting a repeat of yesterday’s and Tuesday’s price action, so I won’t jump in at market. I’ll wait for the pair to pullback first and test support around the rising trend line between 1.5990-1.6000. If I get triggered, I’ll place my stop at 1.5950 and aim for 1.6100. This gives me a respectable 2:1 reward-to-risk ratio. Not bad, eh?

Of course, I can’t forget the fundamentals. Yesterday, the BOE’s meeting minutes revealed that one of the two members that were calling for an increase in the asset purchase program switched sides. He’s now part of the majority who thinks that the current program is sufficient.

In addition, the country’s employment report came in much better than expected. The Claimant Count Change showed that only an additional 3,600 people claimed for unemployment insurance in March instead of 6,600. Meanwhile, the unemployment rate fell to 8.3% from 8.4%.

No major news report today from the U.K., but there are some in the U.S. Namely, we’ll be seeing the initial jobless claims, existing home sales, and the Philly Fed manufacturing index. These news reports could give GBP/USD the volatility it needs to trigger my buy limit order.

To recap:

Buy GBP/USD around 1.5990-1.6000, stop loss at 1.5950, and profit target at 1.6100. I’ll risk 1% of my account on this. Risk disclosure.

XOXO,

Huck

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6 comments

  1. moses

    I would wait till it clears out of April 2nd highs..Move your chart to 4h and see that the stoch showing over bought and corrently heading south…That is what I see..

    Sorry,English is not my mother tongue.

    Reply
  2. FXseeker

    Looks like nice trade,  cable definitely looks strong especially how EURGBP is breaking down to next key support at 0.8060.

    Reply
  3. Joe

    Why is it that when you buy a pair, you either put a small (50-60pips) trialing stop or just 40-50 stop lost but when you sell you are willing to have a 100-120pips stop lost??? I recalled one of you EUR/USD trade ripped just a 10+ pips profit after hitting a trialing stop of 60 only to see the pair rocket up 150+ pips???Your recent EUR/USD saw your profit being half because you stubbornly held on to a 150+ pips profit only to see it wipe out?? You also had another trade (GBP/USD) where you also stubbornly held on to a 100+pips stop lost even when the pair had crossed into negative area twice which eventually saw your trade closed with a 122pips lost???

    Reply
    • Mike

      Further to what Joe had say above, there were also cases (at least 2 cases) of you closing early  of long trades (EUR/USD pair last year) after it dipped into negative of about 50-60pips only to see the pair rocket up 200+ pips subsequently??

      Reply

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