The recent correction of the British pound against the US dollar could probably be a good opportunity for me to go long on the GBPUSD.
The GBPUSD or the Cable as what the people in the FX arena call it rallied strongly from a low of 1.6165 to a high of 1.6600. The pound, however, shed some of its gains after reaching the said high. At present, it is exchanging at around 1.6464 and it seems that there is still some room for it to go lower. I view this correction as temporary. Hence, the pound could bounce right back once it finds a significant support.
The question now is, “Which level is a good entry point?”
To determine this, I got the Fibonacci retracement levels using the 1.6165 swing low and the 1.6600 swing high. So my plan now is to place buy orders at these 3 levels and a stop loss just below the 61.8% Fibonacci retracement level. The presence of a hidden bullish divergence, where the price registers higher lows and the stochastics mark lower lows, suggest a bullish turnaround in prices. I’m just hoping that my long orders get triggered and the price action goes my way. If indeed it does, then I would likely close my position/s at around 1.6550.
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