Is there anything sexier than a breakout? A breakout setup, I mean! I spotted one on GBP/USD and I have to say I’m smitten. Today, I’m buying GBP/USD!
Similar to the EUR/USD setup that Big Pippin pointed out in his Daily Chart Art, there’s also an ascending triangle on GBP/USD in the hourly time frame. The pair has been making higher lows since the start of the week but hasn’t been able to close above 1.5670.
I’ve learned in the School of Pipsology that this is usually taken as a bullish pattern, so I’m going long! But I’m going to wait for the pair to make a new high first, just to be safe.
My plan is to go long at 1.5690 (above Tuesday’s high). If I get triggered, I’ll take profit on half of my position at June’s high around 1.5780 and let the remainder ride the trend. (Hopefully, it rallies back up to 1.6000!) I’ll place my stop at 1.5600, below support at the rising trend line.
The fundamentals also line up. In the most recent MPC Meeting Minutes, it was revealed that the vote to extend the central bank’s asset purchase program was NOT unanimous.
It was actually 7-2, with Spencer Dale and Ben Broadbent opting to keep the program at 325 billion GBP. The split decision was in sharp contrast to the last two occasions when the decision to ease was unanimous.
I think the upcoming retail sales report will serve as the catalyst for the breakout. If it comes in better-than-expected, we could see the pair rally strongly and breakthrough major resistance levels.
To recap, I plan on buying GBP/USD at 1.5690, SL at 1.5600, PT1 1.5780, PT2 1.6000, 1% risk. Risk disclosure.
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