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This setup was discussed in our technical article on GBP/USD last week entitled, Bullish Continuation Seeks Higher-Low. Price action ran down to the top-end of the support zone that we were watching for on Monday of this week, after which buyers showed-up to push prices-higher.
While price action in Cable was retracing last week, a bearish trend-channel appeared, which makes up a bull flag formation. This morning has seen prices return to the upper-end of that channel, and this opens the door for a topside setup with a stop below the recent swing-low. With stops below 1.2845, the setup would take on approximately 75 pips of risk, which can open the door for an initial profit target on a retest of the 1.3000 psychological level, at which point the stop can be adjusted to break-even.
Secondary targets can be cast towards the previous swing-high at 1.3048
Long GBP/USD at Market
Stops below 1.2845
Initial target + break-even stop move at 1.3000
Secondary target at 1.3048
Chart prepared by James Stanley
— Written by James Stanley, Strategist for DailyFX.com
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