Live Trade – GBP/USD (Update)

Filed under: Live Trades |

I talked yesterday about a live trade setup on the GBP/USD forex currency pair (the exchange rate between the British pound and the United States dollar), and today I would like to provide a few updates on how the price action on that pair is unfolding.

 

Figure 1.

Figure 1.

If you take a look at Figure 1, you will be reminded of the setup once again. Price had retraced back up to an area of support/resistance and formed a pin bar, at which point I had put an order in to go short at the break of the low of that pin bar, with a stop loss placed just a few pips above the high of the pin bar, and a target of two times the risk. As yet, this order remains unfilled – despite price going very close (within just a few pips) on a couple of occasions.

 

Since the order was placed, price has formed a small, doji-like candle that sees the market in equilibrium. This tells us that the market is taking a breather, and that the bulls and the bears are having a wrestling match. This also happens to be an inside bar setup, and as such, our order is still valid. If price breaks out of the low of the mother candle of the inside bar, then we will enter the trade – and as the support/resistance level is still holding, then there is a much higher probability of price moving down than there is of it moving up. Therefore, I have left this order in place for now.

 

What I like about this trade setup is the narrative that it is telling us. The support/resistance level has left a scar in the market, and market participants do not forget. The pin bar tells us that the market participants are not willing to buy at this level, while many other people are willing to sell at this level. We will see how this one progresses…

 

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