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
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!