The majors that trade against the US dollar (except the JPY) are looking quite bullish, and with the stock market in a wave ii it also suggests dollar weakness ahead. The 15min chart of the GBP/USD gives me concern on top of all this because an inverse head and shoulders pattern has formed. I don't want to miss the next wave down because it should be a doozy, but I also don't want to lose too much of the 600 pips I'm in the profit on this trade. So I exited the short trade I started at 1.6235 at 1.5633 (click here for original trade setup).
After I exited the trade at a 602 pip profit, I feel comfortable entering a sell stop order at 1.5530 with a buy stop on that order at 1.5655. If the pair rallies much higher then I'll re-short at a stronger level, if it does not rally higher and tanks lower in its wave 3 continuation, then my sell stop order will execute and I'll get back in.
In summary, I exited my short position on the GBP/USD and right now have a sell stop order to get back in the trade on weakness at 1.5530 where if it's executed then I'll have a buy stop to protect that position at 1.5655.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.
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