GBPUSD has been bearish for a while but recent action shows a strong GBP.
In the main chart, we can see a first breakout of the Ichimoku Cloud, then a retracement and a re-test of the second line of the cloud with a very strong reaction by buyers.
If we zoom in, we can appreciate other details.
1. Price already broke last important Swing High of the previous downtrend, so potentially this is already the end of that downtrend, although this is not a guarantee that next trend will be an uptrend;
2. We have a bullish engulfing pattern on an important level of the cloud, followed by strong action by buyers.
3. Risk to reward ratio is better than 1:2, which is great for Ichimoku Trading.
Not everything is good for this trade, though.
If you had the chance to take my course on Ichimoku trading, you would certainly notice that the two fundamental conditions are not fulfilled (yet). The price is still in the cloud and the blue line is flat, coming from a down-movement.
Still, I think there is the potential to take this trade now and take advantage of the great risk to reward ratio that it offers.
An alternative, based on the rules of the Ichimoku, would be to wait for the price to break the cloud (that should also be enough to turn the blue line up):
In that case, you would have a much worse risk to reward ratio, although you get an additional confirmation.
Good luck!
In the main chart, we can see a first breakout of the Ichimoku Cloud, then a retracement and a re-test of the second line of the cloud with a very strong reaction by buyers.
If we zoom in, we can appreciate other details.
1. Price already broke last important Swing High of the previous downtrend, so potentially this is already the end of that downtrend, although this is not a guarantee that next trend will be an uptrend;
2. We have a bullish engulfing pattern on an important level of the cloud, followed by strong action by buyers.
3. Risk to reward ratio is better than 1:2, which is great for Ichimoku Trading.
Not everything is good for this trade, though.
If you had the chance to take my course on Ichimoku trading, you would certainly notice that the two fundamental conditions are not fulfilled (yet). The price is still in the cloud and the blue line is flat, coming from a down-movement.
Still, I think there is the potential to take this trade now and take advantage of the great risk to reward ratio that it offers.
An alternative, based on the rules of the Ichimoku, would be to wait for the price to break the cloud (that should also be enough to turn the blue line up):
In that case, you would have a much worse risk to reward ratio, although you get an additional confirmation.
Good luck!
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