This market has been in my watching list, and later in my blog posts, for the last 2 years. Its infinite consolidation has been my nightmare and my dream for too long.
Here are the key facts to consider if you willing to build a long position in the British Pound.
- The orthodox upper boundary of the massive multi-month symmetrical triangle have been penetrated. Technically the pattern is completed.
- It is completed also what some analysis considered a potential ascending triangle (the lower dotted line in the picture could have been considered the upper boundary of an ascending triangle).
- 2011 highs have been surpassed and now they should act as support – as shown in the monthly plot.
- 2009 highs are still untouched and may act as resistance – as shown in the monthly plot.
- The weekly trend has been up since June 2013 with short consolidations of max 8-week, as shown in the weekly plot below.
- The daily plot shows a continuation head and shoulder pattern completed on May 1st. This daily pattern offers a sweet spot to test the health of the bull trend and to establish a long position with relatively small risk.
FOREX Trading Strategy Idea
- Risk a close below 1.6660 and not more than 50 to 100 basis points (0.5 to 1.0% of trading capital) – based on the contingent overall risk management strategy.
- Above the targets are 1.72 and 1.93 that, if met (and if the trade is not managed) would generate a 550 to 1100 basis point gain (5.5% to 11% of the trading capital).