I am considering a long term buy at 1.4700. The price is within a large rising channel that may see the price return back up to the 1.7 region which is still pretty modest when the exchange rate between 2006 - 2008 was in the region of 2.100 dollars to the pound sterling. The exchange rate has never sustained anything below 1.4 so it seems to me that is may be a good physiological level for buying.
Fundamentally the GBP isn't doing great at the moment and the latest quarterly inflation report suggested that inflation is likely to remain at below 1% until the second half of 2016 which is below their 2% target. I think this trade will be dependant on the US Federal Reserve disappointing with the amount of rate hikes suggested in 2016. It could at least re-test the 1.5900 highs of 2015 but we can't afford any disappointing data from the UK.
A question I have to myself is do I buy at 1.4700 and get out if I have a weekly close below the lower channel trend line, or do I wait for a confirmation such as the price moving below 1.4700 and closing back above the trend line i.e. a lower wick testing the support. Risk to reward is brilliant for this set-up but risk reward is irrelevant if you are picking a losing trade.
I appreciate everyone's constructive feedback and whether anyone can develop on this idea.
Fundamentally the GBP isn't doing great at the moment and the latest quarterly inflation report suggested that inflation is likely to remain at below 1% until the second half of 2016 which is below their 2% target. I think this trade will be dependant on the US Federal Reserve disappointing with the amount of rate hikes suggested in 2016. It could at least re-test the 1.5900 highs of 2015 but we can't afford any disappointing data from the UK.
A question I have to myself is do I buy at 1.4700 and get out if I have a weekly close below the lower channel trend line, or do I wait for a confirmation such as the price moving below 1.4700 and closing back above the trend line i.e. a lower wick testing the support. Risk to reward is brilliant for this set-up but risk reward is irrelevant if you are picking a losing trade.
I appreciate everyone's constructive feedback and whether anyone can develop on this idea.