GBPUSD: Possible Breakout or Reversal Point, Near Long Term Bullish Support Line, Just Reached
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 1.5184 around time of publication today.
Last time GBPUSD was reviewed in Ideas You Can Trade, last month, the trend was still bearish yet prices were near 1.55, and the steeper widening bearish channel (point 2 in magenta on chart below) was pointing towards the very long term bullish support line (point 3 in green on chart below).
Since then the above mentioned longer term support line has been reached and may be a possible breakout or reversal point for GBPUSD. That is, if the breach of this long term line is maintained (note: the breach has just occurred today) a bearish continuation should follow, or if support holds a serious recovery could develop - with either outcome potentially volatile.
An additional chart below show the extent of the longer term bullish support line, and other similar lines across a multi-year period. The next downside target of 1.4812 near the 2013 low is within range over the very near-term.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.5279 with a Limit to take profit @ 1.5378 and a stop-loss @ 1.5183 Risk/Reward Summary: Limit risk = +99 pips profit / (-96) Stop-loss risk = Gain to Loss ratio = 1.03
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.5089 with a Limit to take profit @ 1.4897 and a stop-loss @ 1.5192 Risk/Reward Summary: Limit risk = +192 pips profit /(-103) Stop-loss risk = Gain to Loss Ratio = 1.86
Daily Candle Chart:
Longer Term WEEKLY Candle Chart: