GBP/USD: Will the Rising Trend Line Hold?

Trade idea: 2012-8-2 23:57

GBP/USD 1-Hour Chart

I’ve been wrong a lot lately, so this time I’m gonna play it safe. My account has taken a hit with three straight losses. But hopefully, this time around, I’ll be able to score a win

My plan is to buy GBP/USD. If you zoom out to the 4-hour timeframe, you’ll actually see the pair making higher lows. A rising trend line also becomes apparent when you connect them. I’m anticipating the pair to find some support at it, around 1.5500.

But I don’t want to get ahead of myself so I won’t pull the trigger until I see reversal candlesticks materialize around the psychological handle. I have the candlestick cheat sheet from the School of Pipsology printed so I know what to look for!

Another reason I’m very cautious on going long is because of the Bank of England (BOE)‘s interest rate decision later. It’s widely expected that the central bank will hold rates at 0.50% and hold off on any additional stimulus measures.

If the BOE doesn’t say anything bearish and drops clues that its quantitative easing program is working, the pound could rally. On the other hand, if the central bank shows concern on the economy, the pound could sell-off again. I think anything can happen really!

In any case, if I do decide to buy the pair, I’ll set my stop well below its most recent low at 1.5440. Should price go down to this level, my trade idea would already be invalidated as it would mean that support at the trend line failed. As for my profit target, I’ll be aiming for the resistance area around 1.5720.

To recap, my plan is to:

Buy GBP/USD at 1.5500, SL at 1.5440, PT at 1.5720. Risk 1%. Risk disclosure.

XOXO,

Huck

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9 comments

  1. 6000424

    Lets hope for the best.
    Guys i have a question when exactly is the time when i should watch the market for the reasonable change?

    Reply
  2. Robertok

    I’ve been short earlier in the week, took about 50 pips and was just staying away from the speeches. I noticed the same set up as well. 1.5500 is holding today. Looking for a retracement back to 1.5500 level to get long in London open. Might be a quick trade if I get in. I plan to move stop loss to break even before NFP once it clears about 30 to 40 pips from my entry. Did you have limit orders already set yesterday?

    Reply
    • Hucklekiwi Piphuck Post author

       Still debating whether I should jump in or not. It’s holding for now, but I’m not getting the confirmation to go long that I’m looking for!

      Reply
  3. jango

    I think the pair will go down nometer what draghi’s word.
    on 4H graph i saw a bulish wolf pattern at list to 1.5400.

    Reply

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