As you can see, a very clear bullish flag has formed on Cable’s 4-hour chart. Bullish flags are usually considered continuation patterns.
After a strong move up, price stalls and consolidates as buyers take a moment to catch their breaths before staging another bullish rally.
Given this, and the overall medium-term uptrend, I’m thinking of jumping in long once the price closes above the most recent high. I’ve set a buy stop order at 1.6060 with a profit target yet to be determined.As for my stop, I’ve set a 70-pip trailing stop, which is roughly equal to Cable’s 20-day Daily Average True Range (ATR).
On the fundamental side of things, the revised GDP report for Q3 2012 will be released later. I don’t know if we’ll see any upward revision from the initial reading. However, I want to be ready should that happen.
It also seems that the U.S. fiscal cliff is once again creeping back into market headlines. I’m expecting this to weigh on the dollar in the coming trading days, potentially giving GBP/USD a boost.
To recap, here are the details of my trade:
Buy GBP/USD at 1.6060, stop at 1.5990 (trailing), profit target to be determined. 1% risk.
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