The Great British Pound (GBP) is gaining momentum on a daily basis versus a wide range of other currencies. The GBPCAD, the GBPAUD, the GBPNZD and of course the EURGBP are a few examples of currency pairs that have seen Pound strength dominate price action (the exceptions are obviously the GBPUSD (long-term downtrend) but recently also the GBPJPY).
Therefore it’s time to review the runner up of the current market: the GBP (the US Dollar is the currently the most dominating currency but has already been discussed intensively).
From a technical point of view, the Pound looks prepared for an uptrend continuation and when analyzing the various GBP charts it seems clear to me that the Pound has more space to push.
The weekly chart broke above the orange trend line, made a pullback to the same level, and then bounced off of it for an upside continuation. Of course this is the ‘classical’ BPC (break-pullback-continuation) pattern and it happened twice in a row (light and dark orange lines).
The GBPAUD is also in a clear uptrend: the blue support trend line clearly shows the direction of the currency pair. There was a hefty bearish correction during the first half of 2014, but the pair is now back to challenging the top (2nd time). And considering the recent bullish momentum I am expecting more uptrend.
The GBPAUD stopped at the 38.2% Fibonacci retracement (blue) of the major swing down. Once the top breaks then price has the space to move up to:
- The psychological round figure of 2.00;
- Then to the -27.2% Fibonacci target at 2.05;
- The 50% Fib at 2.0730;
- The confluence of the -61.8% and the 61.8% Fib levels at +/-2.22.
The first 2 targets are the most important obviously as they are relatively close and within range.
I am looking for this trigger on the GBPAUD daily chart: a clear daily candle close above the top WITH a close near the daily high.
The GBPAUD intra-day price action has been pushing hard on Thursday. I will be interested to see on Friday how the Thursday candle closed. Until now only wicks have been able to break above the magenta line (top), which is of course intra-day price action. Once again, I want to see the GBP’s ability to hold above this level.
Once I see my trigger in play, then I am looking for a pullback during next week’s trading to retest this week’s low and to retest the broken top (which now helps as a potential support). I am looking for an entry at the magenta line at 1.9170-1.92 with a stop loss below this week’s low at 1.8895 and a take profit at 1.9970.
Do you like the trade setup? Let us know down below!
Just in case you missed it, here is always my AUDCAD short explained in more detail.
Thanks for sharing and Happy Hunting!
Latest posts by admin (see all)
- Using Simple Moving Averages to clarify the Forex Market - November 13, 2017
- The Huge Benefits of Being a Scalper - November 6, 2017
- The ADX Methodology for Analysis, the Strengths and Values - November 4, 2017
Winner’s Edge Trading, as seen on: