FX.co ★ Trading idea for GBP/USD

GBP / USD rose very sharply in the past days. Unsurprisingly, it bounced down by roughly half of the previous movement, opening a good opportunity to take new long positions. This is likely to provoke another increase above the October high and away from the current descending channel.

There are two possible scenarios for pound:

1. Rebound to the 50% retracement level from the current prices. Here, stop loss is set at 1.35. The risk/reward ratio is 1: 1.

2. Further price increase in lower TFs.

The chart clearly shows that there are three wave patterns (ABC), where wave A represents the buying pressure observed last October. So, using Price Action and Stop Hunting, bullish traders should buy from 1.36300-1.36 to the 50% retracement level. Place stop loss at 1.35 and take profit on the breakdown of 1.38500 and 1.4

Good luck and have a nice trading day!