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Trade Idea: 2012-11-22 1:26 am EST

GBP/USD Hourly Chart

I’ve taken my sweet time on the sidelines, not taking any trades on my discretionary account for the past few weeks. However, I have to admit, I fell head over heels for this simple Fibonacci setup on GBP/USD.

The pair has been slowly creeping higher for the past few trading days. I intend on getting in on the rally by jumping in on the pullback. I’m anticipating the pair to find support around the 38.2% Fib level at 1. 5940. As soon as reversal candlesticks materialize, you can be sure that I’ll be ready to pull the trigger!

Fundamentally, I think my trade also makes sense. For one, the recently released Bank of England Meeting Minutes showed that the central bank policymakers were unwilling to increase stimulus or make any rate hikes in the foreseeable future.

This is bullish for the pound as it means that many traders could start reversing their earlier short positions that bet on further easing.

No more economic releases from U.K. for the rest of the week, so market sentiment will also probably play a vital role in the pound’s price action.

To recap, here’s what I’m going to do:

Long GBP/USD at 1.5940, SL at 1.5880 (below yesterday’s low), PT 1 at 1.6010, PT 2 at 1.6140. 1% risk. Risk disclosure.

XOXO,

Huck

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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.