GBPUSD Analysis: Potential Support and Trading Plan
As anticipated, the GBPUSD pair has undergone a decline, currently trading below the crucial 78.6% Fibonacci retracement level at 1.24700. Our analysis suggests the potential for a retest of the 78.6% Fibonacci level at 1.24850. Following this, we anticipate a downward move towards the 88.6% Fibonacci retracement level, coinciding with the S2 Pivot from D1 at 1.23930 and the psychological support level of 1.24. This convergence of multiple strategies and technical indicators indicates that this support level could potentially act as a formidable barrier for bearish momentum.
From this pivotal support, our outlook envisions a strong upward rally towards the 1.27200 to 1.2800 levels.
In accordance with our trading plan, we are considering initiating a trade near the 88.6% retracement level. To manage risk effectively, we plan to implement a stop-loss order just below the low from May 23rd, positioned at the 1.23 level. This risk management strategy aims to limit potential losses to approximately 0.8%, while targeting a potential reward of around 3-3.5%.
It is crucial to emphasize that this analysis is not a trading recommendation but rather our current perspective, which may evolve as the market approaches our anticipated levels. Always prioritize prudent risk management and align your trading strategy with your individual preferences and risk tolerance.
From this pivotal support, our outlook envisions a strong upward rally towards the 1.27200 to 1.2800 levels.
In accordance with our trading plan, we are considering initiating a trade near the 88.6% retracement level. To manage risk effectively, we plan to implement a stop-loss order just below the low from May 23rd, positioned at the 1.23 level. This risk management strategy aims to limit potential losses to approximately 0.8%, while targeting a potential reward of around 3-3.5%.
It is crucial to emphasize that this analysis is not a trading recommendation but rather our current perspective, which may evolve as the market approaches our anticipated levels. Always prioritize prudent risk management and align your trading strategy with your individual preferences and risk tolerance.
Comment:
Today, we are focusing on the GBPUSD currency pair. In our previous update, we outlined our expectation that GBPUSD would undergo testing at higher levels before eventually embarking on a downward trajectory. However, recent economic data emerging from the UK has been less than stellar, and the current strength of the USD has cast a shadow on the GBPUSD pair. Surprisingly, this downward pressure has presented an opportune moment for the pair to enter a favorable buying zone. This development has led us to initiate our first long position, with the current trading price standing at 1.24000.
As part of our analysis, we anticipate an air of caution prevailing in the market following the European Central Bank's recent interest rate increase. This cautious sentiment is expected to persist in the coming trading sessions as traders prepare for the Federal Reserve's impending rate decision, scheduled for the 20th of September. It's important to note that, on the same day as the FED rate decision, there is a release of inflation rate data from the UK, which will play a pivotal role in influencing the GBPUSD pair, along with the upcoming Bank of England (BOE) interest rate decision.
We anticipate that the UK's inflation rate will surpass expectations, primarily driven by escalating food prices and wages that exceed inflation levels, further intensifying the pressure on UK inflation.
However, it is essential to emphasize that this analysis is not to be construed as a trade recommendation. It serves as our assessment of the pair's dynamics and should not be regarded as specific trading advice. Always exercise due diligence and consider your individual risk tolerance when making trading decisions.
As part of our analysis, we anticipate an air of caution prevailing in the market following the European Central Bank's recent interest rate increase. This cautious sentiment is expected to persist in the coming trading sessions as traders prepare for the Federal Reserve's impending rate decision, scheduled for the 20th of September. It's important to note that, on the same day as the FED rate decision, there is a release of inflation rate data from the UK, which will play a pivotal role in influencing the GBPUSD pair, along with the upcoming Bank of England (BOE) interest rate decision.
We anticipate that the UK's inflation rate will surpass expectations, primarily driven by escalating food prices and wages that exceed inflation levels, further intensifying the pressure on UK inflation.
However, it is essential to emphasize that this analysis is not to be construed as a trade recommendation. It serves as our assessment of the pair's dynamics and should not be regarded as specific trading advice. Always exercise due diligence and consider your individual risk tolerance when making trading decisions.
Trade closed manually:
Trade was closed at BE after market pulled back after UK inflaction data
Our broader market analysis suggests that both EURUSD and GBPUSD may reach their respective peaks around September 20th to 22nd. This timeframe coincides with the release of important economic data, such as the UK Inflation data scheduled for the 20th and the FED rate decision on the same day. These events can significantly influence market sentiment and direction.
Should GBPUSD manage to break above the 1.26 resistance level, we could potentially see a sharp move towards the 1.26750-1.27200 price range. However, it's essential to exercise caution as the current economic outlook for the UK may limit the likelihood of such a significant upward surge. Nevertheless, prudent risk management demands that we consider this scenario.
In the event that GBPUSD remains below the 1.26 mark, our analysis suggests a retracement towards the price levels we previously indicated. As the market landscape evolves, staying vigilant and adapting to changing conditions is key to successful trading strategies.