Short Trade set-up on GBPUSD hourly.

Earlier today, we concluded today’s bias is to go short.

The Hourly chart above is currently forming a tradable pattern. Price bottomed temporarily @ 1.6031. Hence, we expected price to retrace to the area between 1.6130 and 1.6230 (which is the area between the 50% and 100% fib. retracement levels – drawn from the most recent hourly swing high to the current price-bottom). Currently, price has retraced to the 50% fib. level. Let’s seek to sell around this area. If price exceeds the 1.6230 level upward, our bearish bias is no more valid and we enter a no-trading zone. Our profit target is @ 1.5977.


The 15min. chart above gives us a clearer view of the hourly price action and the potential areas to sell (please note it’s advisable to set a Limit order ahead of time as price could move up to these levels and reverse sharply in our favor)
This chart is rather cluttered but if we look closely, there are a couple of potential reversal levels available. You choose your preferred level based on your personality.

fib 50% ret. @ 1.6130 (price is currently at this level);
fib 78.6% ret. @ 1.6187.

Initial Stop Loss @ 1.6232; primary Profit target @ 1.5977 (Please remember to factor in your broker’s pip-spread).

Please note that all these Fibonacci (fib.) levels have other pivots, overlapping fibs or previous highs/lows supporting them (they are the cause of this cluttered chart). As such, price could reverse at any of the points. The issue here is that the higher the fib level you choose to sell from, the smaller the pips you’ll risk and the more your pip-profit; BUT, also the more the likelihood of you missing the trade as price might not retrace that high before moving back downward.
You need your own discretion here. Personally, I usually don’t go for 50% as the reward/risk is too conservative for me, but it doesn’t mean you can’t profit using it as your entry level, as long as your trade is well managed. As shown, my limit order is already set around the 78.6% level.

Please keep your risk low. Don’t risk more than 2% of your capital. Personally, I risk about 0.5% per trade; and each trade has a potential profit target of 1% or more – based on my exit levels.