GBPUSD - A position trade
Analysis
GBP has been on a downward trend since it formed a double top Jan then April then unwound in a steep decline. The daily trend is short.
Technicals
Price has reached 161.8% of the last fib before the decline indicated by the blue arrows.
The extension has been reached and yesterday price formed a doji.
This level is also a really strong support level and role reversal. We would expect price to rise from here as the Bears take profit and the Bulls move in as the GPB is cheap.
The trade plan
Using my edge of mean reversion I am therefore considering a countertrend trade on this pair.
My targets are the 0.382 = 1.3709 (approx) & overlapping with the first level of resistance where I will be scaling 1/2 of my position
Then I will be leaving the rest for the overlapping retracement levels 50% & 23.50 of the previous rise and resistance.
On the four hour chart we have seen a series of higher highs and higher lows. Signifying a change of trend. However I need further confirmation that price is exhausted it’s lows and is heading up . London today may offer up an opportunity to enter.
Understanding how the GBP can sometimes overrun it’s fib levels or support/resistance levels then spike back we need to look for an area of good support and mitigate our risk. It’s similar to a freight train stopping and reversing.
I will wait for price to come back to a 0.382 on the 4hr CHART or the 1.3335 -1.3320 area with a stop near 1.3304. Patience will pay off on this trade plan if the GBP offers an retracement on the lower time frames. Sometimes GBP does not offer up a retracement making this pair difficult to enter once it begins to trend.
Analysis
GBP has been on a downward trend since it formed a double top Jan then April then unwound in a steep decline. The daily trend is short.
Technicals
Price has reached 161.8% of the last fib before the decline indicated by the blue arrows.
The extension has been reached and yesterday price formed a doji.
This level is also a really strong support level and role reversal. We would expect price to rise from here as the Bears take profit and the Bulls move in as the GPB is cheap.
The trade plan
Using my edge of mean reversion I am therefore considering a countertrend trade on this pair.
My targets are the 0.382 = 1.3709 (approx) & overlapping with the first level of resistance where I will be scaling 1/2 of my position
Then I will be leaving the rest for the overlapping retracement levels 50% & 23.50 of the previous rise and resistance.
On the four hour chart we have seen a series of higher highs and higher lows. Signifying a change of trend. However I need further confirmation that price is exhausted it’s lows and is heading up . London today may offer up an opportunity to enter.
Understanding how the GBP can sometimes overrun it’s fib levels or support/resistance levels then spike back we need to look for an area of good support and mitigate our risk. It’s similar to a freight train stopping and reversing.
I will wait for price to come back to a 0.382 on the 4hr CHART or the 1.3335 -1.3320 area with a stop near 1.3304. Patience will pay off on this trade plan if the GBP offers an retracement on the lower time frames. Sometimes GBP does not offer up a retracement making this pair difficult to enter once it begins to trend.