Marc Principato, CMT
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Marc Principato, CMT in Marc Principato, CMT - SMB Capital,


Trade Better Here.
GBP/USD broader trend is clearly bullish. Recent price action is in consolidation mode.  This presents us with two potential long opportunities in the near term.
Scenario 1: Since recent price action is choppy, I am looking for price to retrace and test a minor support within the 1.6550 area. Any bullish validation would present a day trade opportunity with a conservative target at T1 (1.6730 area) and a much more aggressive target at T2 (1.6880 area). Since this is a minor support, it is a good idea to reduce risk by locking in some profit around this level. 
Scenario 2: If there is a deeper retracement into S2 (1.6450 area) then I will be looking to price to validate a swing trade.  This is a higher expectation trade and since it is inline with the broader trend, I am willing to give it more of a change to reach T2. Depending on the price action, I am also willing to lock in some profit at T1 as well. 
The difference between the these two scenarios is the risk and expectations. Scenario 1 is a day trade, a tighter stop can be used and a smaller target is justified by the magnitude of the price structure. Scenario two is a swing trade, off of a more significant level relative to S1. This magnitude makes it reasonable to have a higher expectation of the trade upon proper validation.
Overall, from a broader perspective, this pair is forming a bullish pennant and if it breaks out, can see prices push significantly higher. Take note of the nature of the flat correction taking place on the chart. I interpret that as a further sign of strength.
To learn more about how I conduct this type of analysis and to improve your trading click here.