GBPUSD is a pair that we love to trade. GBPUSD fell almost 300 pips in just 24 hours. It started yesterday. GBPUSD had been going up and up and had almost gained around 1000 pips in the last 12 days when it suddenly fell 300 pips. This is how these pairs behave. Suddenly these pairs start moving in one direction. Then suddenly these pairs change direction and are moving in the opposite direction. GBPUSD has been moving up and up. On Thursday it suddenly started falling. Why? When price starts to increase without consolidation, expect it to fall suddenly. This is precisely what has happened. The bullish mood suddenly turned into a bearish one. Take a look at the following chart.
You can see a clear bearish divergence signal on the H1 chart. Our entry was 1.54550 and the stop loss was 1.54955. This is what happend. On poor GBP Retail Sales m/m data, GBPUSD started falling. It fell around 200 pips. Then it made a retracement of about 100 pips. Today GBP Manufacturing PMI data also disappointed the market. So it reinforced the downtrend. You can see GBPUSD has fallen more than 300 pips in just 24 hours and it seems it will fall more. Take a look at the H4 chart also.
If price breaks the aqua line (EMA 55), it is a signal that GBPUSD will fall even more. So this is how currency trading goes. You have to check the charts and if you lucky to spot a good trade setup, you should make an immediate entry. With that don’t expect everything to work according to plan. Markets are always unpredictable. Even if you spot a perfect bearish divergence pattern, you never know. It can be a fake pattern. Just take your chance. Don’t hesitate. Make the entry. Once you are into the trade. Let the winner run. We will let this trade run as long as the MACD on H4 timeframe does not change color.
Another thing that you can do is add more positions if you want to be more greedy and if you want to make your life more difficult. You never know when the market makes a sudden swing in the opposite direction. Adding more positions requires a lot of practice. You need to make sure that you are not adding too much risk to your position. So let’s keep things simple. Making 300 pips in 24 hours without adding more positions is not a bad idea.