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Woohoo! Caught a decent win on this long sterling play just ahead of the BOE decision last week, but I can’t help but wonder if I should’ve held on longer.

Long GBP/AUD Trade

I had my one good eye on the ascending channel bottom around the 1.6300 handle, but I wasn’t sure if the support would hold at that time. I decided to wait for a bit more confirmation from both fundamentals and technicals before hopping in when U.K. CPI surpassed expectations.

I was able to hop in just past the 1.6500 mark and set my sights on the mid-channel area of interest close to the 1.7000 major psychological resistance. I figured that this would be a reasonable target for a short-term trade, but it looks like GBP/AUD might have enough energy to make it all the way to the channel top near 1.7700.

GBP/AUD Daily Forex Chart
GBP/AUD Daily Forex Chart

Then again, I didn’t want to be too selfish on this trade, knowing how market sentiment has been flipping on a dime in the past few weeks. Besides, Australia also had its share of top-tier catalysts lined up, so I figured I’d keep it simple.

All in all, this one turned out to be a pretty straightforward play since the BOE did sound more optimistic than usual, keeping the door open for potential tightening in the coming months. But with strong bullish momentum in play for this pair, I’m staying on the lookout for potential pullback entries to ride the climb if it continues.

I gotta remind myself to be patient, though, as the U.K. has its retail sales report due while Australia is waiting on the RBA meeting minutes. I’m keeping my eyes peeled for a strong break past 1.7000 or a correction to the 1.6800-1.6700 levels for a lower entry.

For now, here’s what I ended up with:

P/L: +440 pips / +0.53%

Not bad, eh? In retrospect, I can’t help but wish that I set a slightly tighter stop since I went for a momentum play, but at the same time I’m happy with how I managed my risk with a major event risk on the docket. In any case, I hope I can follow this up with another good win this week!

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