With the pound taking a breather from its losses, I took advantage of an opportunity to jump in on Cable’s downtrend. What do you think of this forex setup?
If you’ve read this week’s Trading Prep post, then you’ll know that British election-related updates were earmarked as one of the possible market-movers this week.
And move the markets they did! The pound has taken a few hits on reports that Theresa May and her Conservative Party may not get the bigger majority that they wanted in the June elections.
Sterling hasn’t gone down though! With not a lot of major catalysts to trade, pound traders have mostly been trading and taking profits from the election-related headlines.
I spotted an opportunity today when GBP/USD popped back up to 1.2900.
As you can see, the major psychological level conveniently lines up with the top weekly ATR, a 61.8% Fibonacci retracement level, a falling trend line resistance, AND the 200 SMA on the 1-hour time frame.
Of course, it also doesn’t hurt that stochastic is overbought right now.
I decided to enter at market (1.2902) with my initial stop loss just above last week’s high. I’m initially targeting the 1.2750 low for profit, though I can make adjustments depending on the strength of the trend.
What do you think? Will Cable’s downtrend continue for the rest of the week?
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