I predict the GBPUSD to range for at least a week this May. The 0.382 Fibonacci retracement level would hold as a resistance, whereas the 0.618 Fib retracement level would hold as a support to the ranging price; this gives us a 1.32% (0.01970) price range. This prediction leads us to believe that going short would be the best option for today.
As seen on this 4H line chart, there has a been a pattern of Downtrend - Ranging - (fast) Downtrend - Uptrend since January.
Although the price ranged at 0.98% in January, the small difference of 1.32% - 1.28% = 0.04% between April and the predicted ranging trend in May, leads us further to trust this pattern.
In spite of the fact that I have predicted that a downtrend would follow this week's ranging price, the 0.764 retracement level would not necessarily hold, and/or there may not be any downtrend following it at all. It would be too ambitious to predict the pattern to hold three consecutive times.
To minimise the loss if my prediction turns out to be incorrect, going short at a stop loss of 1.52000 would be a good choice. You could also set up a take profit at around 1.49000, so the bounce at the 0.618 Fib retracement level does not cause you to lose on that short trade.
As seen on this 4H line chart, there has a been a pattern of Downtrend - Ranging - (fast) Downtrend - Uptrend since January.
- In January, the price ranged at 0.98% (0.01472).
- In March/April, the price ranged at 1.28% (0.01893).
- In May, the price is predicted to range at 1.32% (0.01970).
Although the price ranged at 0.98% in January, the small difference of 1.32% - 1.28% = 0.04% between April and the predicted ranging trend in May, leads us further to trust this pattern.
In spite of the fact that I have predicted that a downtrend would follow this week's ranging price, the 0.764 retracement level would not necessarily hold, and/or there may not be any downtrend following it at all. It would be too ambitious to predict the pattern to hold three consecutive times.
To minimise the loss if my prediction turns out to be incorrect, going short at a stop loss of 1.52000 would be a good choice. You could also set up a take profit at around 1.49000, so the bounce at the 0.618 Fib retracement level does not cause you to lose on that short trade.