Last week we saw some confusion in the markets with GBP, if any of you were short like I was you'd feel a litter bit confused as to why price moved the way it did. If you could see we had consolidated early, you would have been the lucky ones.
This week however we have opened with a very different story. With the EU talks about the recovery plan for Covid-19 and the UK starting to introduce more business back in its economy, it seems we are still long for GBP. Along with this, we have to consider why we are taking look at GBPUSD particularly. USA has had enormous amounts of grief due to Covid-19 and its issues with BLM that has sparked outrage - it is not particularly appealing to investors at the moment hence why we have seen continued weakness in the dollar. It is not attractive as New Zealand and Australia, but Britain is looking quite positive in terms of its Covid-19 recovery.
This works in our favour to go long on GBP. We can see we have found some areas of support we will be monitoring in order to find a pattern that validates our trade. The green lines are highlighting potential targets for the week if we continue to see strong bullish momentum. If we are stopped out, we can look for our entries to enter short, but this will only live out if we see the correct conditions.
This week however we have opened with a very different story. With the EU talks about the recovery plan for Covid-19 and the UK starting to introduce more business back in its economy, it seems we are still long for GBP. Along with this, we have to consider why we are taking look at GBPUSD particularly. USA has had enormous amounts of grief due to Covid-19 and its issues with BLM that has sparked outrage - it is not particularly appealing to investors at the moment hence why we have seen continued weakness in the dollar. It is not attractive as New Zealand and Australia, but Britain is looking quite positive in terms of its Covid-19 recovery.
This works in our favour to go long on GBP. We can see we have found some areas of support we will be monitoring in order to find a pattern that validates our trade. The green lines are highlighting potential targets for the week if we continue to see strong bullish momentum. If we are stopped out, we can look for our entries to enter short, but this will only live out if we see the correct conditions.
In terms of my analysis on GBP, we did see a slight rally without a full retest to the zone illustrated above. This morning we saw a big sell off, most likely large investors cashing out on the move to the upside.
This made me a little bit skeptical as my bias for GBPUSD was overall long and we had already hit Daily resistance so the possibility of a large drop was looming. When our overall bias is long, we cannot enter short unless we have seen lower lows and lower highs being formed first on the 1H time frame to confirm market structure is showing signs of sell pressure.
As a result, all of the indications are pointing towards a long opportunity. I have entered long on GBPUSD with my entry and exit points below and my reasons for these limits.
Entry - 1.26487 - Buy Limit
TP - 1.27477- 100 pips (we are expecting another breakout so set TP just below peak of yesterday's high)
SL - 1.26357 - 13 pips
RR - 1:7.69