Good evening! I thought I’d end the week by throwing out a trade idea on GBPUSD. The US Dollar rallied on Thursday as a drop in global equities caused a run to the Greenback. Will we see more risk aversion trades into the weekend?
I have the hourly chart up on Cable and there are a few arguments for a further move down. First, we can see a break of the rising trendline, which drew in more sellers before finding support around 1.6600. The pair is currently retracing, so I used the Fibonacci tool to find potential areas of resistance. It looks like any where in between the usual Fib levels would be a great place to take a chance on a reversal lower, but I think I am going to go aggressive and jump in at the 38% Fib level. My stop will be above the rising trendline and the 61% Fib level. My target will be the swing low at 1.6600.
Short GBPUSD at 1.6700, stop at 1.6800, tp at 1.6600
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
No major data points for Friday, so technicals should work out for the day, plus I think risk aversion will continue as traders take off risk into the weekend and ahead of the holidays. I will close my open orders or open position before the end of the Friday trading session.
Stay tuned and good luck!