Update on today’s GBPUSD Short Trade set-up

If you were able to identify the GBPUSD Short trade set-up and took the trade, that’s great. For unavoidable reasons, I wasn’t in the market at the time of price action. However, I’ll go ahead to give analysis of today’s bias based on higher time frame charts, and then explain the steps I would’ve taken so far in managing the Short trade.

On the Daily chart above, for days, price has been struggling around the upward trend-line: lots of indecision regarding whether to reverse upward or continue its movement downward. Currently, price has broken the previous day low downward; hence, we expect continuation of the downward move. However, the most recent Daily swing low @ 1.6274 (which we’ve highlighted using the lower blue broken line) is a major support level that we have to keep in mind.

On the H4 chart above, price broke the most recent swing low @ 1.6418 (which we’ve highlighted using the blue broken line) downward. That automatically sustained our bias in favor of a downward price move. The white horizontal line @ 1.6622 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

On the Hourly chart above, price pattern was forming lower highs and lower lows; hence, drawing the Fibonacci tool using the most recent Hourly swing high @ 1.6427, and the temporary price-bottom @ 1.6339, we had potential price reversal areas around fibs. 61.8% ret. (1.6393) and 78.6% ret. (1.6408) levels. (Pls NOTE both retracement levels were supported by pivots, other fibs., and previous lows).
Initial Stop Loss was placed 2pips above the most recent Hourly swing high @ 1.6432 (broker’s spread included). Primary profit target @ 1.6317 (two pips above the fib. 127% ext.).

On The 15min chart above, with a clearer view of the Hourly price action, and based on my reward:risk ratio assessment, I would place my Limit Order in-between both fibs. 61.8% and 78.6% ret. levels – precisely @ 1.6400, which is just under a Daily pivot @ 1.6402. After the Limit Order was triggered @ 1.6400, and price reversed downward almost immediately – with the 15min engulfing-candle reversal formation at a confluence of resistance – it was a good opportunity to quickly turn the trade to a no-loss trade. With a 3-lot position, I would take profit on one lot @ 25-pip profit, and then adjust the Stop Loss for the remaining position to 12 pips above my Entry level (5 pips above the most recent 15min swing high @ 1.6407). That automatically would’ve made the trade a no-loss trade with a profit potential of 83 pips.
The next step would have been to identify an appropriate level where I could take profit on the second lot, as price has the tendency to turn upward as it moves further downward toward the price-bottom @ 1.6339.