GBP/USD 4H Challenge
Past challenge from 2026-03-07. See the correct answer and explanation below.
SCENARIO
GBP/USD is at 1.2650. Price has formed a clear double bottom pattern at 1.2580 over the past week. The neckline at 1.2680 has not yet been broken. Price is approaching the neckline for the third time. RSI(14) is at 58 and trending up. MACD just crossed bullish.
Market Context
Bank of England kept rates unchanged last meeting. UK GDP came in slightly above expectations. US dollar is weakening broadly against majors.
Key Levels
The double bottom with bullish momentum indicators and a weakening dollar creates a high-probability long setup. However, do not enter before the neckline breaks. Place a buy stop at 1.2685 (above neckline) with a stop at 1.2570 (below the double bottom) targeting 1.2750 (the measured move). This gives a 1:1.7 R:R with pattern confirmation.
Prop Firm Implications
The 5%ers allow holding overnight, making this a suitable swing trade setup that can be managed over 2-3 days for the full measured move.