We observe a change of trend, price is creating higher high and higher low from a 4h timeframe. Our stop loss is about 100pips from current level and take profit is roughly 165pips away. Risk reward ratio will be 1.6 times. We will invalidate our bullish bias when price pushes below 1.308
Over the past week, we see US dollar weakening. Fed Yellen did not set a hawkish tone during her address. It was highlighted that inflation figure is a concern, below the targeted inflation rate of Fed, with year on year consumer price index rate dropped to lowest in 8 months. Retail sales also contracted slightly. With that, September rate hike should be likely be put on hold. During this period, we observe that other central banks seem to be hawkish of the economy, an indication of rate hike.
That explains and suggests that demand for US dollar to be negatively impacted while favoring other currencies with which central banks are hawkish. We observe the strengthening of GBP, AUD and CAD.
We went long after GBPUSD broke above short term downward trend line and identified bullish engulfing candlestick pattern. We wanted to take profit at 1.562 but since market is closing for the week, we closed the position prematurely at a profit of 1%.
We believe GBPUSD has 5th wave in the making. Price broke above short term downward trend line and we have identified a bullish engulfing candlestick pattern. We favor long at 1.5468 with stop loss 1.5415, take profit 1.562 and risk reward 3.
I took a short in GBPUSD at 1.5284 with stop loss 1.5322, take profit 1.5117 and risk reward 4. This trade was taken as there is continued USD strength, GBPUSD 4h has a bearish engulfing signal and is currently in a short term downward trend. In GBPUSD 30mins, there is also a pin bar signal. As for GBPJPY 4h, it also broke below upward trend line, signalling that GBP will move lower further.
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