Trading idea. Buying GBP against USD.

 

The Bank of England seems to be ready to raise its key rate, possibly at the next meeting. This event was the main reason for the pound's rise against all currencies, and the Bank of England's press release said that if the economy continues to grow, then monetary support will begin to curtail in the coming months, and looking ahead, one can assume the following: the Bank of England will hold a cycle of raising rates.

The situation with the growth of the pound is likely to last for more than a month, at the very least until the first meeting of the Bank of England, which is scheduled for November 2, and considering that the US economy does not show steady growth, the currency pair GBP/USD has a good chance to climb much higher than the level of 1.4 in the medium term. Only a growing US economy and the rising inflation rate are capable to break the status quo in this situation.

Now about the main thing - when and how to enter the position. If there is doubt and fear, then it is better not to take risks. For those who want to take a limited risk, it is better to build a financial structure by breaking the planned money limit, which is designed to enter the long position, into three equal parts in terms of money volume, so that the weighted average price of entry, in case of a correction to the level 1.3, would be approximately 1.33. The first entry of 1/3 of the total estimated position, is possible at current prices at the time of publication of the article, and if vertical growth continues, the remaining part of unused funds will go to another asset.

The full construction is based on the idea that in the GBP/USD pair, a correction to the prices of 1.31-1.32 will be possible.

The level near 1.30 is a key level, and in case of a significant price reduction below the indicated mark, it is necessary to search for the best price for exiting the position.

The target for the GBP/USD pair in the medium term lies at around 1.45, and if the status quo remains in the market, this price is seen as the maximum of the movement, whose beginning lies at 1.29 -1.30. Should this scenario develop from the level of 1.41, technically strong resistance marks begin, and, ideally, the possible construction should acquire the following form: when the pair is corrected, a position with a weighted average price close to 1.33 is entered, where further exit from the position is carried out in equal parts by volume with the expectation that the weighted average exit price will be close to 1.40. For those who think that it was necessary to buy at 1.25, it should be remembered that it is most important to make sure that there is a trend first, and not to catch falling knives. We wish you profitable trading!

 

 


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Care: These reviews are a private opinion of ARUM CAPITAL and are provided for information only. In no way can the provided analysis be considered as an action signal, neither is it any sort of investment advice (for the purposes of EU Directive 2004/39/EC). ARUM CAPITAL waives any liability for the trading results which may arise after using these reviews. These materials contain NO warranties or guarantees, either direct or implicit, on the precise, complete or confirmed character of the details they contain.

 

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