The GBP/USD currency pair has formed a downward sloping flag formation.  This sets up a potential trade, and due to the action leading into the current formation, we have multiple profit targets.

A break above the upper channel line (see chart) indicates a swing higher with a target of 1.6500.  A move aggressive target is 1.6550 which is just above a former swing high from early July.

A break lower is less likely, but could happen.  The target would be 50 pips below the breakout point  of the lower channel line (see chart).  A more aggressive target is 100 pips.

The channel lines change over time because they are sloping, so it is prudent to reconstruct these lines on your own chart.

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Source: Forexyard, GBP/USD 1 Hour Chart

~Cory Mitchell, CMT
Chief Market Strategist
Remember, failed breakouts are tradeable too!

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One Response to “GBP/USD Day Trade Setup – July 16”

1. admin says:

   July 17, 2009 at 4:00 am

   The pair broke higher but failed to reach the profit target by 20 pips. Since the rate has moved back down to the entry point the trade is finished.

   There should be no loss on the trade. If trades are open still for this trade, they should be closed as we are very close to breakeven.