So last week the Bank of England released a rather hawkish statement which caused GBPUSD to end the week 400+ pips higher and finally confirmed we are in a new bull GBPUSD market.
We now have a full confirmation of a massive and strong Head & Shoulders pattern. GBPUSD is finally bullish we now expect it to reach the 1.45 area in the next 60-90 days.
Before I continue with this post, this upcoming Wednesday (20.9.17) the FOMC is due to meet, it is highly expected that the FOMC will release information that it will begin quantitative tightening (the opposite of QE) and state that it will raise rates, most likely, in December. If this meeting is bullish for the USD then we can see GBPUSD retest the recent broken resistance at 1.32750, if however the FOMC surprises the markets with a bearish meeting then we could see GBPUSD quickly reach the 1.38 area and start an aggressive uptrend.
Let's take a look at the weekly chart of GBPUSD.
There is plenty of information in the image itself but let me explain this a little better.
With lat weeks breakout of the "Key resistance / neckline" we received the final confirmation that in the next few weeks GBPUSD will be trending higher as the head & shoulders pattern has been officially confirmed, and don't worry, your not late to earn some serious pips on this trade.
What we need you to do is be careful of MM's (market makers) pushing price to take people out of their long-trades, just like the bull on top knocking out its taunter (who thought he is smarter than the bull) the MM's might just pull a trick or two to take out the people who get in too soon.
Don't be the guy who messes with the bull... it's better to watch the action from the sidelines and just make money by following the markets. There's no good reason to fight a bull otherwise you will end with bruises just like the dude in the gif did.
In short, we will probably wait for the FOMC meeting before we act on the GBPUSD trade idea, we don't want to have an argument with the markets, that will prove to be expensive so we will just react towards what the market is doing. We are NOT looking to short GBPUSD at all, even though there are possibilities to earn over 200 pips on the downside, we will just be waiting too long the pair and target the 1.45 are once we enter. Below are two ways we could trade GBPUSD.
1. Pending/Market order at 1.32750, 1.31485 or 1.3050.
Why 3 prices? Well because I have absolutely no clue where price will stop if it goes down, but I know it will be at one of these 3 areas.
Let me explain with the daily chart of GBPUSD
Rarely do we see price action continue in one direction with fundamentals, one direction moves usually happen with major changes (such as brexit, trump, war etc) thus shorting GBPUSD is more logical than buying it in the short run. Here's why, 1. FOMC meeting is expected to be bullish for USD. 2. Profit taking could occur on GBPUSD after the 400+ pip move last week.
I listed 3 key areas where I will look to buy, I will however, not rush into taking a trade at each of these levels, meaning it will require a little patience before I make any executive decision on when I will buy exactly.
I just know that if GBPUSD is to go up, it will have to reverse at one of the 3 levels listed below, which one I have no idea... sorry.
I know it sounds like a cliche but if you want to know when I enter you should become a member as I will let my members know of any move I make here. Its just 35 euros a month. Anyhow, lets move over to the next strategy.
2. Market execution
We don't need a second chart to explain the market execution strategy. A market execution strategy seem to be better. Thinking about it now, I will probably enter my sell trade on GBPUSD and target the first level as a profit target its probably going to be an easy 250 pips. So yes, I entered a sell on GBPUSD, my SL is at 1.36170, TP at 1.32670.
Anyway lets get back to the idea, I am looking to enter a market order at any of the 3 levels listed, but what the market order will allow me to do is to simply follow the market once it shows good to great signs of a support. I honestly think it should come down to the 2nd level before going up but I will let the market decide what it wants to do, like I said I don't want to have an argument with it. So if it breaks the 1.36170 I will look to long, otherwise I will wait for it to reach one of the levels shown in the image above.
The trade idea has massive potentials to earn very well and I just can't wait to to pull a Jerry McGuire on it once I close in the profits!