The price for the Gbp/Usd shot up rapidly on Friday after the negative U.S construction data came out. After the initial spike the price has topped out and the momentum has dropped and the price could continue to drop based on the 4hr chart. If you look at the chart below I have highlighted some topping tails combined with a bearish candle that could indicate continued momentum to the downside.
I will enter a short position based on the 4hr bearish candle and put my stop above the high of the previous candle and my target is around 100 pips away from the current price.
I will be keeping risk very tight so that I will not over expose my account. This is something that is very important to remember.
Notice the range that the weekly chart is in for several weeks. I would mark those lines on your charts so that you will not be surpised the the price stalls when it nears the range. It is about a 400 pip range from from 1.6400 to 1.5936
Thanks for reading and please follow me on twitter for live forex updates. Also please feel free to leave a comment.
Winner’s Edge Trading, as seen on: