GBPUSD: Continues Slide Past 1.5000, and Close to Hitting 1.4800 in European Session This Friday
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 1.4846 around time of publication today - and just off session lows in Europe this Friday.
Last time GBPUSD was reviewed in Ideas You Can Trade earlier this month, the pair was heading back towards 1.5000, and subsequently did trade lower. Since hitting that downside target this Wednesday, the pair has continued to slide lower - and is close to a support line near 1.4815 which is also near its last multi-year-low.
If 1.4800 is surpassed the slide should continue, whereas a strong reversal could occur from above 1.4800 as had in the past. From a longer term view looking at the additional Monthly candle chart below - GBPUSD may be heading back towards a very long term bearish resistance line (see point 1 in red on monthly chart below) which points to the 2008 low of 1.3500 which could be reached during 2015.
Below are examples of how to trade a bearish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4970 with a Limit to take profit @ 1.5031 and a stop-loss @ 1.4929 Risk/Reward Summary: Limit risk = 61 pips profit / (-41) Stop-loss risk = Gain to Loss ratio = 1.48
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4841 with a Limit to take profit @ 1.4801 and a stop-loss @ 1.4879 Risk/Reward Summary: Limit risk = 40 pips profit /(-38) Stop-loss risk = Gain to Loss Ratio = 1.05
Daily Candle Chart:
Monthly Candle Chart: