GBP/USD has been making significant breaks above psychological handles recently, confirming that the pair has strong bullish momentum. However, there have been a few pullbacks, eventually creating a short-term rising trend line on its 1-hour time frame.

At the moment, the pair is sitting on the trend line and testing support around the 1.6400 major psychological level. Stochastic is indicating oversold conditions, which hint at a possible bounce to the previous highs or new highs, depending on how U.K. data turns out.

Going long at market with a 50-pip stop and a target of 100 pips could yield a 2:1 return on risk. Moving the stop to entry once price tests the previous highs around 1.6450 is a good way to manage risk. 

By Kate Curtis from Trader’s Way