Forex Trade Signals and Setups Feb. 16th

GBPUSD – Explodes to Take Out 20ema

After consolidating for the first few hours of the London open, the Cable in a matter of a few hours shot up almost 150pips in early NY trading.  This is the first time it has closed above the 20ema on the 4hr time frame since Feb. 13th, where it shortly after closed below and resumed the downtrend as noted in the chart below.

price action breakout 2ndskiesforex feb 16th

This time however, we think the pair has other plans as the abnormally large bullish candle likely took out stops from the bears that were riding this trend, at the very minimum caused profit taking for those that shorted near the recent highs at 1.5915.  In fact, I’d guess any sellers at that price have likely closed their shorts based on what they saw in that extremely large candle.

So what does this mean for now?  

Well first off, take a look at the intraday 3min time frame chart below.  Notice once price got started, it never really gave up control to the sellers.  We know this since price action has closed so close to the high and remained there, telling us the bulls have done very little profit taking and plan on taking it higher since they have not left the market yet.

price action trading breakout retest 2ndskiesforex feb 16th

Also, price is hovering around the R3 Pivot (last pivot for the day).  This is generally touched only 6% of the time, and the fact its not only touched it, but hovering there represents the extremity of this move.  There were several entries to get into this move, even if you missed the initial punch.

Take a look at the breakout-pullback of the swing high from the initial move marked on the chart.  Notice the breakout-bar had good clearing distance but pulled right back to where the swing point was.  This was a great setup to get back in long and many of our intraday price action traders got into this with a very tiny stop targeting the R3 pivot making over +40pips in a couple of hours so hopefully you did the same.

With that being said, we expect higher prices, but warn a little caution about the weekend coming and position paring.  We would not want to be holding longs into the weekend, and would want to be out before the London close.  Aggressive bulls can look for intraday longs at 1.5780-ish or pullbacks to 1.5762, looking for a retest of the highs at 1.5812 and an eventual breakout, targeting the 1.5850 area.

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Buddhist, Trader and Philanthropist

I'm Chris Capre, Founder of 2ndSkiesForex. I help traders of all levels change the way they think, trade and perform. As a professional trader, I specialize in trading price action. As a teacher, my passion lies in showing you how to re-wire your brain for successful trading. Want to improve your edge right now? Visit my Price Action Course page.

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