GBPUSD: Bullish territory Reached As Higher High Pushed Through Resistance
The daily candle chart below shows the price history of the Great British Pound (GBP) versus the United States Dollar (USD), this pair is known as GBPUSD and is currently trading around 1.6651 (around time of publication), after pushing higher in todays trading session.
The pair has recovered since finding support on the previous line that was discussed in the last post about the GBPUSD in the Ideas You Can Trade series, and is continuing up a very short term bullish support line (point 3 in aqua color on chart), and just overcame the 1.6670 level that had previously acted as resistance on January 24, 2014.
Since the pair has today broken above this level, and made a higher high, the price action can be thought to be more bullish, with a bullish continuation to test higher prices likely especially if 1.6700 is breached.
Whereas is this level cannot be held, a return lower could ensue with support targeted on a less bearish angled resistance line (point 9 in magenta), just below.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.6702 with a Limit to take profit @ 1.6744 and a stop-loss @ 1.6678 Risk/Reward Summary: Limit risk = +42 pips profit / (-24) Stop-loss risk = Gain to Loss ratio = 1.75
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.6593 with a Limit to take profit @ 1.6559 and a stop-loss @ 1.6619 Risk/Reward Summary: Limit risk = +34 pips profit / (-26) Stop-loss risk = Gain to Loss Ratio =1.30
Daily candle chart: