Today’s deep GPBUSD pullback seems to be an excellent opportunity for making some pips!
Why is that? The GBPUSD is entrenched in a strong uptrend but price has made a decent pullback within that trend.
This offers traders the opportunity to join the trend at a discount.
This is counter-intuitive to the view of most traders, who focus heavily on reversal setups (both on purpose or by accident). However, here is a firm WARNING: trends can be extremely tough to stop which means that counter trend trades are often mistimed and stop losses get taken out prematurely. If you see this recurring often in your trading, be cautious. Back to the GBPUSD…
The recent price action has seen upward momentum, followed by a decent sized consolidation, which has corrected down to the 50% Fibonacci level. Usually when price goes sideways after a strong momentum, it is usually setting itself up for trend continuation.
The trade details GBPUSD long:
1) Our entry was at 1.7130 but some trader room members managed to get in even lower.
2) The stop loss is below the current bottom at 1.7079.
3) The take profits levels are aiming at the -27.2% and the -61.8% Fibonacci targets at 1.7222 an 1.7280.
4) A trail stop loss of 15 pips is used for each new 1 hour bottom (a candle low that has 2 candles to the right and 2 candles to the left).
5) The reward to risk ratios for the above trade details when target is hit: 1.8 for the 1st target and 2.9 for the 2nd target.
Is there a certain guarantee that price will indeed move up and reach our target? Not any trade will ever have a 100% chance. Never. But the statistics of this setup are in our favor and that is the desired winners edge.
This was the setup we are taking. Let us know down below what you think of it? Does the trade make sense to you? Or do you see danger that we missed? Let us know down below!
Latest posts by Chris Svorcik (see all)
- How to Use Support & Resistance for Determining Entry Zones - November 20, 2014
- Forex Trading Opportunities on Aussie, Loonie and Kiwi - November 19, 2014
- Forex Analysis & Setups on the Majors - November 17, 2014
Winner’s Edge Trading, as seen on: