Although I lost on my GBP/USD trade last week, I'm still not giving up on the pair! Instead of hoping for a reversal though, I'm planning to ride the uptrend this time around.
I almost immediately fell in love with the setup when I saw it on Big Pippin's chart art for today. GBP/USD traded past resistance at 1.5600 last week but using the Fibonacci retracement tool, we see the pair could revisit the major psychological handle soon. If that happens, I'll be ready to go long!
Actually, I'm flexible with my entry. When I see reversal candlesticks materialize around the Fib levels and confirm my theory that price will find support at the rising trend line, I'll pull the trigger. I think I will then put my stop at 1.5530, well below the 61.8% Fib level while aiming for the pair to tap a new high around 1.5800.
If reversal candlesticks don't materialize though, little ol' Huck will just stay at the side lines this week. I would take it as a sign that the pound's rally is over. It's unlikey especially since the currency's fundamental landscape now is far from being PIP-turesque (Ha! Get it??).
According to Pip Diddy, the MPC minutes yesterday showed that the BOE could resort to QE very soon with more central bankers realizing the need to provide the economy with more stimulus.
But perhaps the pound will find some support if the retail sales report comes in better than expected later. I'll see how the pair reacts to the figure and if I'm convinced that it's enough to sustain the uptrend, I might just enter at market. I'll be sure to let you guys know!
To recap, I plan to:
Buy GBP/USD at 1.5600, SL at 1.5530, PT at 1.5800. 1% risk. (Risk disclosure.)