Onto the technicals, the is showing candles forming at an important weekly psychological level which indicates momentum slowing down, as well as finding support at our dynamic ( ) zone.
When we delve into the H4 charts, we can see a long wick penetrating intra-day support before closing above the , indicating a failed rally by the bears. Daily trend indicates a momentum and currently we are exhibiting a counter-trend line on the H4 charts, giving us a nice trend-line break-retest trade.
In terms of risk-management, a 0.5%-1% risk tolerance should be applied in this scenario as it is a moderate probability trade given the fundamental background surrounding Sterling. Given the economic climate of GBP, a low risk tolerance should always be applied to protect ones capital!
This can produce a nice 1:2+ risk:reward if traded right!