GBPUSD: Bullish At 1.3329 If Price Can Do This One Thing.

GBPUSD update: Bearish momentum has been reluctant but this pair has persisted lower. Price is now nearing a very significant support level of 1.3329. Being over a hundred pips away means there is a lot of room for messy price action, but we are still looking for a swing trade long setup.

1.3329 is the .382 of the bullish structure that is relative to the low made in December of 2016. This means this level carries a lot of weight, but also means the margin of error around the level is very wide. Price can break below by 50 pips or more and then find buyers, so expecting precision in this area is not the best idea.

Also keep in mind, if this bearish momentum persists, it is within reason for price to retest the 1.3051 reversal zone boundary. The point being there is a lot of room for this market to breath if it is going to find a short term bottom.

This bigger picture view helps to highlight the potential for day trade shorts since that is what momentum favors. In terms of swing trades though, risk of reversal starts to increase dramatically especially below 1.3329. This means do not short and hold.

At S.C., we are evaluating this situation for bullish reversal patterns which are nonexistent at the moment. The reason is if price action can construct a reversal formation, the potential is high since the first target is at the 1.3770 area which is the .382 of the current bearish structure.

We are not looking to capture 400 pips, but a quarter of that is within reason, and worth it if we can keep the risk at 50 pips or less.

The EURUSD is also in a similar situation, and we are evaluating opportunities in the Gold market as well (obviously a play on the Dollar). Check S.C. for recent articles on how we are navigating these markets.

Comment:

Price went as low as 1.3305 and is now hesitating back up to the 1.3350 area. So far the 1.3329 level is in play. We will be watching the next few sessions to see if this market can develop a reversal pattern. Quick answer to the moving average question: I do not use moving averages. The 25 lsma I will look at on occasion only to help determine if I should let a position run or not. I do not use at all for evaluating entries. Details will be posted on S.C. if a signal appears in this market.

Comment:

Quick update: Just wanted to point out the inside bar formation. This is also occurring in the EUR/USD which I am about to post a report about. Keep in mind we are going into a holiday week here in the U.S. and I will not want to be long into that.