GBPUSD: 2nd Day 1.50 Breached; Here's What's Possible Next
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 1.5001 around time of publication today.
Last time GBPUSD was reviewed in Ideas You Can Trade, earlier this month, a longer term bullish support line was being tested and subsequently failed as the USD continued to gain against nearly all major currency pairs.
Since then the pair traded lower - closing yesterday above 1.5000 - just barely, but again traded under it earlier today and is now closely hovering above this price line.
While attention may be on the EURUSD today - which is in a steep dive hitting 1.1113 earlier - the GBPUSD is also getting pounded (pun intended) and deserves attention as 1.5000 is a key support line.
If 1.5000 fails to be maintained the multi-year low near 1.4800 appears the next downside target where a reasonable recovery could follow the recent ultra-bullish USD strength which is still pushing this pair lower. The additional longer term weekly candle chart further below depicts this trend, and points to 1.4228 (the 2010 low) that is also within reach.
If support builds above 1.50 and a correction in the green-back occurs, a sharp recovery could follow as volatility has been high recently and exists as a real threat to risk/reward levels.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.5080 with a Limit to take profit @ 1.5190 and a stop-loss @ 1.4998 Risk/Reward Summary: Limit risk = +110 pips profit / (-82) Stop-loss risk = Gain to Loss ratio = 1.34
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4942 with a Limit to take profit @ 1.4865 and a stop-loss @ 1.5001 Risk/Reward Summary: Limit risk = +77 pips profit /(-59) Stop-loss risk = Gain to Loss Ratio = 1.30
Daily Candle Chart:
Longer Term WEEKLY Candle Chart: