As you know, in recent months we have been buying into GBPUSD with the belief we will see further strength in this pair – for a couple of reasons:
- Dollar weakness
- Pound strength (post-Brexit)
DXY has been in a downtrend for a while and the target is around the 2018 lows.
Weekly and Daily Trend Check is down and, as Javid mentioned on the last MaR, price might be forming a double top – suggesting a continuation to the downside.
The GBP has suffered over the past few years but now Brexit is complete, and the UK is fully committed to a super-fast Covid vaccine roll-out, there is room for growth in the currency and stock market.
This was our other reason to look at buying into the currency pair.
The target from the start was 1.4000 – and possibly even 1.5000 in the longer term.
There have been many times we have bought further into this uptrend on slight weakness, during the day, allowing us to profit with fairly low risk.
The intra-day chart provides a guideline of where we bought yesterday. Our entries were based on buy limit orders around round numbers – but they also coincided with hourly MAs.
So the trend is bullish and the weakness – during the day – offers more opportunities to enter as price heads towards our target level.
All that was required was to trade:
- in the overall trend direction
- look for some weakness near term
- place orders near support zones, and
- take some profits along the way.
We have been doing this for months – but the biggest gain has happened in recent weeks (as price was contained prior to the breakout).
The chart above shows the squeeze which is common before the continuation – which is no different to trading stocks.
I hope this helps in clarifying Javid’s TRC comments regarding this trade.
Let’s go trade!