My last trade on GBP/USD didn’t work out so well but I’m not going to let it stop me from taking another shot in trading the pair. How can I ignore this beautiful setup?
On the hourly chart, we see that price has been trending higher. In fact, the pair just tapped its 6-week high at 1.6131 yesterday. We also see that the pair has been bouncing off support at the rising trend line these past few days. I don’t expect today to be any different. Using the Fibonacci retracement tool, we see that the line coincides nicely with the 38.2% Fib level. Nice, eh?
With that, I’m planning to buy the pair around the Fib level at 1.6075 once the pair tests that level. If I do decide to pull the trigger, I’ll place my stop well below the rising trend line at 1.6030. Once the price reaches this level, my trade idea will have already been invalidated.
Fundamentally, I think my trade also makes sense. The Bank of England (BOE) is expected to sit on its hands in its interest rate meeting later. Given the loose monetary policy of the bank in the past couple of months, the bulls probably welcome a wait-and-see approach by the central bank.
I’m also banking on all the positive news that has been coming out of the eurozone. If you recall, just a few days ago, Spain has officially requested a bailout while Greece has been granted its next tranche of aid.
To recap, here’s what I plan to do:
Long GBP/USD at 1.6075. SL at 1.6030, PT to be determined. 1% risk. Risk disclosure.
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