Ready for some mid-week trading?
I hope you like trading them U.S. dollahs because we’re hitting the majors today!
First up is a nice and simple trend play for Cable.
GBP/USD is consolidating around the 1.4150 minor psychological handle, which is right around the 100 SMA on the 4-hour time frame. What’s more, it’s also near a trend line that the bulls and bears have been minding since late April!The cherry on top of this sweet opportunity is a bullish divergence on the chart.
Buying at the first signs of bullish momentum is a good play if you believe that the pound can keep on gaining pips against the dollar. The 1.4240 June highs is a good initial target though you can also aim for new Q2 2021 highs if the momentum is strong enough.
If you’d rather sell the pound against the dollar, then you’ll want to at least wait for a clear break below the trend line support. Of course, you also have to make sure that you’re seeing a breakout and not a fakeout!
A few weeks ago, we talked about USD/CHF extending its downtrend after a channel resistance test.
Well, I hope you took the trade because USD/CHF ended up making new May lows!But that was last week. This week, USD/CHF is not only flirting with the 100 SMA, but it’s also trading juuuust above the channel resistance that we talked about.
If you’re convinced that we’re looking at a breakout in the making, then you can start making trading plans for USD/CHF consistently trading above the 100 SMA. The .9020 area is a good enough target but you can also aim for .9075 if the bulls get enough momentum.
If you believe that USD/CHF will revisit May’s lows, though, or if it has room to extend its longer-term downtrend, then you can also start selling at current levels and then just scale in depending on the strength of the downtrend.