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    Today’s Trading Edge: GBP/USD remains weak following GDP revisions

     

    WWM GBPUSD MAY 28 2015

    Earlier in London, sterling extended its morning slide after the second revision of second quarter GDP came in unchanged, but lower than an expected 0.4% gain.  GBP/USD plunged 94 pips to 1.5265 after the release. 

    In my last GBP/USD post, I highlighted how the recent slide that began from the 1.5814 high appears to have been confirmed by a bearish butterfly pattern.  The X to A leg targeted point D with 127.2% Fibonacci expansion level, while the B to C slide used the 161.8 Fibonacci expansion level. 

    Downward momentum may remain strong as this currency pair is already weak from a strong US dollar.  The daily chart shown above shows that key support may come from the both the 50.0% Fibonacci retracement of the April low to May high move and the 100-day SMA.  If the 1.5189 level does not hold, deeper support may come from the psychological 1.50 handle.    

    Major resistance will come from yesterday’s high of 1.5436.  A daily close above that level could open the door for a rally to target the 200-day SMA.    

    The trade: Sell GBP/USD 1.5285, with a stop loss at 1.5335 and take profit at 1.5185.  The risk/reward ratio is 1:2

    Edward J. Moya

    Senior Market Strategist

    WorldWideMarkets Online Trading

    Forex Trading Demo
     

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