FX.co ★ Trading idea for GBP/USD

Dollar unexpectedly sank yesterday despite the positive data on US inflation. Accordingly, this resulted in pound rallying, during which a bullish engulfing pattern was formed, and the quote hit the level where most buyers set their stop orders. Sell stops, meanwhile, remained intact.

Pound could undergo a pullback if traders make use of Fibonacci extensions.

Since pound has a three-wave pattern (ABC), where wave A represents the buying pressure on Thursday, traders can open long positions to trigger a 50% retracement from 1.41400-1.41300. Place stop loss at 1.41, and then take profit at the breakdown of 1.42. This strategy is under the framework of Price Action and Stop Hunting.

Good luck!