GBPUSD has an exciting setup today
The LOB setup in the XM Live Trading Session was triggered early today, and now it is moving with +40 green pips. The exciting thing is that I didn’t sell it because of the LOB setup. This is a good example when I use LOB only as the first part of the strategy – “the Trigger”.
If we check the bigger picture, like the H4 chart, we will see that the price is moving in an interesting short-term wave cycle.
5-waves were completed, as we can see, and then bulls got tired to go for higher highs, which confirmed the beginning of ABC correction for the H4 chart. Well, it’s a great combination of LOB at the top of wave B to ensure the beginning of the BC wave.
Stop-loss, as discussed in the Live Trading Session, will be at the top of the recent peak on H1 and targets based on ATR projections will be at 1.1544 (done), 1.1531 and 1.1511. But based on my short-term wave analysis, the targets are at 1.1500 (the bottom of wave-A, previous structure high, which makes it a key level and is psychological). If the price manages to break below that level, the target for taking profits will be 1.1425 (Fibo 38.2, matching one of the previous highs, and it is the least level for having wave-C completion for me.)
Since we have started with the H4 to H1, we can now check GBPUSD on the bigger picture, like the daily chart.
Counting the last wave cycle on the Daily, we had five clear waves in the motive wave cycle. After the GBP crash from the Liz Truss decisions that also crashed the pension system in the UK, the price grew well to complete its ABC correction (well, obviously, this is not the case, but it’s fun to express like this).
The real reason for GBP recovery is the U-turn expectations and the new PM – Rishi Sunak. But when the world reserve currency (USD) is taking over, almost nothing can resist it, so the week now is starting with the Risk-off sentiment seems like.
And based on what I see daily (the ABC triangle) I think that the chances of this price dropping around 1.1200, 1.1000 are technically very possible.
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