GBPUSD: Recovery Staged as Support Near 1.6800 Tested
The daily candle chart below shows the price history of the Great British Pound (GBP) versus the United States Dollar (USD). This currency pair is known as GBPUSD, and is trading near 1.6882 around time of publication today.
Since last week, when the GBPUSD was reviewed in the Ideas You Can Trade series, the bearish momentum continued and support was found just above 1.6800 - as anticipated in that last post- coinciding just below a 38.2% fibonacci intersecting near 1.6830.
In addition, the pair has entered into a more bearish channel (point 6 in yellow on chart below), with a less-bearish channel just above current levels (point 9 in magenta color) where the pair is approaching the lower support line of that channel which may act as resistance to further upside in the very short term (such as today or tomorrow).
As the pullback looks for support, the floor established over the last three trading days near 1.6812 -may hold enough to provide a bullish reversal, whereas if 1.6800 fails a bearish continuation may follow.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.6906 with a Limit to take profit @ 1.6956 and a stop-loss @ 1.6869 Risk/Reward Summary: Limit risk = +50 pips profit / (-37) Stop-loss risk = Gain to Loss ratio = 1.35 [limit and stop level updated post-publication due to error]
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.6799 with a Limit to take profit @ 1.6758 and a stop-loss @ 1.6833 Risk/Reward Summary: Limit risk = +41 pips profit /(-34) Stop-loss risk = Gain to Loss Ratio = 1.20
Daily candle chart: