Whether you’re a day or swing trader, I got yo back with not one, but TWO hot setups. Check out GBP/USD and EUR/GBP‘s downtrends!
EUR/GBP is about to hit the .8420 area, which is right around a previous support and resistance. What’s more, it also lines up with the top of a descending channel on the 1-hour time frame!
Think EUR/GBP can sustain another downswing? Shorting at the first signs of a bounce from the area would give you a good reward-to-risk ratio especially if the pair ends up making new February lows in the next couple of days.
If you believe that euro bulls are just getting started, however, then you could also wait until EUR/GBP pops above the channel that we’re watching and aim for areas of interest closer to .8460 and .8500 instead.
Whichever bias you choose to trade, make sure you’re using your best risk management practices! You wouldn’t want to lose your hard-earned profits from a single trade, would you?
Currency crosses not your thing? Check out Cable’s downtrend! GBP/USD looks ready to turn lower after finding resistance at the 200 SMA on the 4-hour time frame.
What makes the setup more interesting today is that the SMA is also near a descending channel resistance. Coincidence? Only if you want it to be!
Shorting at current levels and placing your stops just above the channel would make for a good trade if you’re a pound bear who’s betting on GBP/USD dropping back to its 1.2870 lows.
If you’re one of them pound bulls, however, then you might want to at least wait for a clear break above the channel before you enter your long positions. The 1.3150 and 1.3200 handles look handy (heh) as initial profit targets in this case.
Not sure where to place your stop and profit targets? Use MarketMilk’s handy GBP/USD volatility analysis for clues!
Forex Chart Settings:
Slow Stochastic: 14,3,3
100 SMA: Blue line
200 SMA: Red line
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