GBP/USD has been bearish since making a high on the year in mid-July, at 1.7191. Since then, price has bearish without any significant consolidation. Have had at most 2-3 sessions of consolidation, but they were all under 100 pips.
Carney's comments over the weekend should help GBP/USD consolidate with some strong upside risk then before, but we should respect the bearish outlook until price breaks above the trendline. If price breaks above 1.68, we might have to consider a more significant period of consolidation, and therefore might put the bearish outlook aside for the short-term.
GBP/USD 4H Chart 8/18
So, if price approaches 1.68, and the 4H RSI approaches 60, let's get ready for sellers.
Let's assess a plan to sell around 1.68:
Entry: Let's consider an entry at 1.6785. Look for price to stop rallying. It would be nice to see a bearish divergence in the 1H chart at this point.
Stop-loss: A break above 1.68 is trouble for this bearish trade plan, so let's say we have a stop-loss at 1.6815. With entry at 1.6785, this would yield a risk of 30 pips.
Target/Reward: Let's first limit the bearish outlook to 1.67 in case the market fails to extend the bearish trend. If so, the potential reward is 85 pips.
Reward to Risk: This yields a reward to risk ratio of 85:30, or about 2.8:1.
Trade safe, trade well!
Carney's comments over the weekend should help GBP/USD consolidate with some strong upside risk then before, but we should respect the bearish outlook until price breaks above the trendline. If price breaks above 1.68, we might have to consider a more significant period of consolidation, and therefore might put the bearish outlook aside for the short-term.
GBP/USD 4H Chart 8/18
So, if price approaches 1.68, and the 4H RSI approaches 60, let's get ready for sellers.
Let's assess a plan to sell around 1.68:
Entry: Let's consider an entry at 1.6785. Look for price to stop rallying. It would be nice to see a bearish divergence in the 1H chart at this point.
Stop-loss: A break above 1.68 is trouble for this bearish trade plan, so let's say we have a stop-loss at 1.6815. With entry at 1.6785, this would yield a risk of 30 pips.
Target/Reward: Let's first limit the bearish outlook to 1.67 in case the market fails to extend the bearish trend. If so, the potential reward is 85 pips.
Reward to Risk: This yields a reward to risk ratio of 85:30, or about 2.8:1.
Trade safe, trade well!
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