WEEKLY RANGE KEEPS GBP USD TRADERS HOLDING GAINS
The Pound Sterling has been in a steady uptrend over the last few months in keeping with growing expectations of a rate increase by the Bank of England. This has led to very profitable trading opportunities for Swing Traders who are patient enough to hold on to their trades for several days at a time. One such opportunity presented itself several days ago when there was a strong break of a Counter Trend Line (CTL) that appeared to indicate the resumption of the trend. However, this signal was one to have avoided given its proximity to the Weekly Range- an important price barrier that all currency pairs obey before pulling back. Those lucky enough to have spotted this price barrier would have easily avoided the pullback and been able to hold on to their trading gains.
In the chart below, we can see that the most recent uptrend began with a breakout from a Pennant Consolidation Setup. This led to price gains of several hundred pips over the next few days before pausing to pullback and form this CTL Setup. Following this pullback, another Bull Candle was provided to signal another entry possibility to capture more pips in the direction of the Pound.
As tempting as this appeared to be, caution needed to have been exercised here. Given that we were very close to the Weekly Range, entry at this latest signal would have led to a floating loss for several days or Stop Losses being triggered. The better option is always to wait on the sidelines until the currency pair goes through its natural cycle of pullbacks at these areas and then provides another signal to start a new Weekly Range trend.
Such an opportunity could come from another strong break of the latest CTL or a Consolidation that could also be formed in the next couple of days. In either case, the price area of 1,7485 could be the next Weekly Range target to be hit for more trading gains, once the right setup is provided.
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