Sup, dawg! If you’re lookin’ for trend plays on the pound, then I’ve got your fix ‘coz I’m serving up a couple of channels in today’s intraday charts update, with GBP/USD and GBP/CAD in focus.
GBP/USD has been trending higher for some time now. Not only that, GBP/USD has been moving ever higher while apparently respecting an ascending channel.
As y’all should know by now, one of the more conservative ways to play an ascending channel is to look for opportunities to go long on the pair when price is at or close to the channel’s support area.
Well, as y’all can see, the pair is getting there, so y’all better get ready to start looking. And all the more so, given that stochastic is already signaling oversold conditions and all that.
However, do note that the pair is already testing an area of interest at 1.3390, which happens to line up with the 50% Fibonacci retracement level.
There’s therefore a chance that the pair may move back up without reaching the channel’s support area, which should be somewhere around the 1.3950 minor psychological level.
Also, keep in mind that there’s always a risk that the setup may fail and open the way for a downside channel breakout. If that happens, then just be ready to bail yo longs and/or switch to a more bearish bias, especially if the pair moves lower past 1.3890.
An ascending channel has also recently formed on GBP/CAD’s 1-hour chart. Well, this one is actually only a potential ascending channel because the pair has yet to confirm the channel by moving back up again.
And since the channel ain’t validated yet, there’s a higher-than-average chance that support at 1.8280 won’t hold.
And since the setup is extra risky, it’s highly recommended that only gangsta traders should bother lookin’ for a chance to go long on the pair. Conservative traders, meanwhile, may wanna sit this one out for now.
With that said, stochastic is already signaling oversold conditions, so the pair may be gearing up for an upswing soon.
But if the bears somehow overpower the bulls, thereby invalidating the would-be channel, then just get ready to switch to a more bearish bias if the pair moves lower and takes out 1.8180.
In any case, just remember to practice proper risk management as always, a’ight?