After taking hits in the past few days, is it time for the pound to get some lovin’ from forex traders? Here’s the uptrend that I’m looking at!
As you can see, GBP/USD has been trading on a near rising channel for most of the year. And, thanks to Theresa May bungling her recent speeches, Cable has seen a 500-pip drop in the past couple of days.
But is it time for the pound to get back its mojo? The pair has bounced from the 1.3100 levels, which happens to line up with not only the rising channel support, but also a 61.8% Fibonacci retracement AND 100 SMA support on the daily time frame.
Fundamentally, it also makes sense for the dollar to see some losses. See, the drums of war have gotten a bit louder with a North Korean official sharing that Trump has lit the “fuse of war” with his “Rocket Man” remarks before the United Nations.
Meanwhile, the POTUS recently threatened that “only one thing will work” with North Korea, and no, he wasn’t talking about calling in Batman…or was he?
Over in the U.K., traders seem to have given the pound a break after they priced in their Brexit concerns last week. In fact, they seem pretty happy with this week’s upside surprises to U.K.’s reports with rate hike expectations from the BOE remaining mostly unchanged.
I decided to place my orders at 1.3225 since it would mean that the pair had broken above the top weekly ATR after bouncing from the 61.8% Fib. I’ve placed my stops well below the channel at 1.2950 and set my sights on the previous highs as my initial profit target.
Here’s the deal:
Risked 0.5% at 1.3225, initial profit target at 1.3575, stop loss at 1.2950.
As with other swing and long-term trades, I’ll be revisiting the dollar and pound’s themes to see if I need to make adjustments. For now, though, my order has been triggered and I’m playing a waiting game.
What do you think of the setup? Are you buying the pound, too?
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