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GBP/USD Prepares to Breakout

GBP/USD Prepares to Breakout

Walker England, Forex Trading Instructor

Market Condition: GBP/USD Pending Daily Breakout

Target 1: 2X ATR204 Pips

Target 2: 4x Range408 Pips

Invalidation: Continued Consolidation

GBP/USD Daily Chart

(Created using Marketscope 2.0 Charts)

The GBP/USD has retraced off of its weekly highs at 1.3445. As the pair continues to retrace this week’s rally, the GBP/USD has stalled with the creation of an inside bar. Traders may begin looking for a breakout next week, by using yesterday’s low and high as values of support and resistance. Thursday’s low is acting support, and bearish breakouts may begin under 1.3283. Alternatively, bullish breakouts may begin above Thursdays high of 1.3375. Current ATR for the GBP/USD reads at 104 pips. Traders looking for an initial 2X ATR target may look for a bearish breakout towards 1.3075, or a bullish move to 1.3583

In the event of a false breakout, traders may consider using a 1X ATR stop to create an initial 1:2 Risk/Reward ratio. Traders should also remember that it is possible that price action may fail to breakout. In this scenario, traders may elect to leave

pending entry orders, or trade the ensuing range

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.