GBPUSD: Steep recovery testing 1.56 today, bearish resistance still remains under 1.60 and within scope of bearish channel
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 1.5582 around time of publication today - and just off fresh session highs under 1.56 - a level missed last Friday.
Last time GBPUSD was reviewed in Ideas You Can Trade was on May 14th when 1.58 was reached and the overall uptrend was analyzed. A sharp pullback did follow from that high yet lasted longer than expected until the pair bounced from above 1.51 and is back into its current steep ascent and was just a few pips away from passing last Friday's high.
If the current bullish momentum continues, then resistance may be sought again under 1.60, whereas if the three intersecting support lines that have just been regained today are lost (see purple, green, and aqua color on chart below) - then a steep drop could follow if these three lines fail.
Therefore, volatility may pickup as GBPUSD appears to be near a major crossroad as well as approaching another crossroad soon under the resistance line of the bearish channel (point 1 on chart in white).
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.5605 with a Limit to take profit @ 1.5635 and a stop-loss @ 1.5575 Risk/Reward Summary: Limit risk = 30 pips profit / (-30) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.5499 with a Limit to take profit @ 1.5450 and a stop-loss @ 1.5548 Risk/Reward Summary: Limit risk = 49 pips profit /(-49) Stop-loss risk = Gain to Loss Ratio = 1.00
Daily Candle Chart:
Daily Candle Chart zoomed-out: