GBPUSD: Bearish momentum brings pair towards potential double-bottom on 1.4633 where support may be re-tested
The daily candle chart below shows the short term 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 1.4708 around time of publication and barely higher from the session low of 1.4683 - after falling from 1.4884 earlier today (a nearly 200 pip intra-day range).
Last time GBPUSD was reviewed in Ideas You Can Trade in March, the bearish momentum was resuming and subsequently traded lower before support was reached on 1.4633 - the last low before a brief recovery pushed the pair back above 1.5000 - and before returning lower and trading mostly sideways since then (in a smaller range).
However, the large drop seen in today's trading range indicates that it's likely that GBPUSD will retest 1.4633 where a double-bottom pattern could help lift prices higher again (if support on 1.4633 holds).
On the other hand If support on 1.4633 is lost, then the bearish momentum could accelerate with a lower-low following - as that would indicate a failure of the double-bottom and be a bearish signal. The longer-term and medium-term trend have otherwise not changed, and if 1.5000 isn't regained in the near-term then a bearish continuation seems most probably to unfold from here.
Below are examples of how to trade a bearish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4958 with a Limit to take profit @ 1.5010 and a stop-loss @ 1.4907 Risk/Reward Summary: Limit risk = +52 pips profit / (-51) Stop-loss risk = Gain to Loss ratio = 1.01
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4682 with a Limit to take profit @ 1.4633 and a stop-loss @ 1.4724 Risk/Reward Summary: Limit risk = +49 pips profit /(-42) Stop-loss risk = Gain to Loss Ratio = 1.16
Daily Candle Chart: