GBP/USD: 4-hour
Long or short: Short
Chart:
Trade rationale: There’s a potential retracement on the 4-hour time frame, and the pair could find resistance at the 1.5900 handle. That’s in line with a former support area and the 50% Fib.
I’m still bearish on the pound because of the BOE’s recent growth and inflation downgrades as well as the prospect of further easing from the central bank. Plus, there’s a chance that the debt crisis in euro zone could spill over to UK since they have a huge exposure to Italian debt.
Entry point: 1.5900
Target: 1.5700
Stop loss: 1.5950
Potential reward-to-risk: At least 4:1 but I plan to add to my position every 100 pips if it goes my way.