ForexVader
Short

GBPUSD - Head & Shoulders And How To Play

FX:GBPUSD   British Pound / U.S. Dollar
With Resistance at 1.5400 appearing to be holding strong, an uncertain GBP and hopes for a rate hike in the US sometime in the coming months, this pair definitely has Bearish potential. And the technicals appear to be backing that up with what seems to be a Head and Shoulders pattern in the making.

Price has stalled below the 1.5400 level and the 0.382 retracement level. With a Hanging Man occurring on the daily after a couple of "up days", it looks like the pair could be ready to break the neckline. Should this occur I'd ideally want want to see a retest of the neckline as resistance before seeing the move down.

Regardless of how you like to trade these, an entry level below the neckline at 1.5200 and a generous SL at 1.5400 provides a potential 3:1 Reward:Risk when calculating profit targets from this pattern the traditional way -
http://www.investopedia.com/articles/technical/121201.asp - giving a rounded up target of 1.4600, which also happens to be this years low to beat so far.
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