I believe in using fundamentals to set my direction and technicals to time my entry.
Fundamentals: Long GBPUSD
- The 4 rate hikes in 2018 and 2 more in 2019 is almost fully priced in. The USD has enjoyed its bull run, but I believe it's time for it to come to an end.
- GBP strength has firmed Thursday after Carney expressed stronger conviction on in the UK. Hawkish sentiments within the BoE continues to materialize, signalling greater possibility of an impeding rate hike. GBP still looks undervalued after the selloff that begin in Mid april.
Technicals: Enter now if risk appetite is high, or enter when price closes above 1.3340 out of the inner upper band
- Small green/red arrow indicates upward/downward trend exhausting, big green/red arrow indicates upward/downward trend beginning
- Downward trend has exhausted > 29 June the pair shot from below the 2nd outer to inside the inner bands
- Upward trend is about to begin > between price action and
Conclusion: Bag your winners quick
- As kathy lien always emphasizes: dont be too greedy. I typically stick to a 2:1 risk ratio and do a T1-T2 approach.
- Set stop loss near recent lows