GBPUSD - What trade setup in this pair is CURRENTLY active?GBP/USDIG:GBPUSDprofxedgeProfessional traders ask themselves this question all the time, especially if doubts arise, whatever the circumstances. The reason is that before you even begin talking or thinking about taking a setup, you sure want to know if the previous (open, current) setup is over first. So, what trade setup are we currently in on the GBPUSD? Well, if you look at this pair on the 4hr timeframe chart, a way to see this is by putting a mark on the moment on the MACD in which the histogram marked a confirmed red candle (red vertical line). In that moment (confirmed histogram cross) you know that, at the very minimum, you are inside a 4hr down move, however short that might be. And you can very well see here that the GBPUSD started this 4hr down move earlier this week on Monday. You will also notice that on the correction to the upside before the histogram 4hr cross, inside it (so you have to move to the 2hr or 1hr timeframe to see this) you also have internal divergence (marked with the purple lines on the chart and macd). This makes sense, of course, so far so good. If you wanted to be in this trade, you probably wanted to wait for a minor degree correction, such as the 2hr or 1hr timeframes, to use the levels of said correction as the setup (entry below the correction, stop loss above it). The arrows in this chart mark the impulses and the following ones, the purple lines mark the existing correction between one impulse and the other. And where is the supposed target of this move? Well for the moment, to simplify, we're just going to assume it will be at the end of a movement of the exact same magnitude of the previous impulse in the same direction (marked with the dark blue arrows). Is it that simple & does it always play like this? No, it's not that simple. In fact I picked this chart specifically to show the potential setups that were there on these "higher" timeframes (2hr/4hr) to illustrate what happened structurally. You can see that on the upside structure marked with the white arrows, the second upside impulse did not perform fully after the correction. Also, treated like this it wouldn't be a good setup either (pretty bad risk to reward to start with, 1:2). The one after that, however, downside impulses marked with the yellow arrows, performed more than expected but also the risk to reward was much better to start with (1:3). The current one looks pretty good overall (R:R = 1:4). Is there anything critical about this current setup? Yes, but the criticality is not in the GBPUSD chart. You have to look at the dollar index to see it clearly. There is a possibility that the dollar basket will go for a 0.8 / 1% depreciation. Although the pound is not a huge portion of the dollar basket, this could still mean that one more upside move on the GBPUSD is still possible, in which case you will have another histogram cross back in the green on the MACD (marked with the numbers 1,2 and 3).