GBP/USD Technical Analysis: Short Trade Triggered at 1.55
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- GBP/USD Technical Strategy: Short at 1.5500
- Pound Breaks Four-Month Trend Line Support Level
- Short Trade Triggered, Aiming Below 1.54 Figure
The British Pound appears to be on the verge of resuming its long-term down trend against the US Dollar after prices broke support capping losses since early May. Cable largely stood aside from the aggressive volatility breaking out across financial markets in recent sessions but a degree of catch-up momentum appears to have emerged, although a clear-cut catalyst for the move lower at this precise time is tough to nail down.
Risk/reward considerations look attractive to attempt a short position and we will now sell GBPUSD, initially targeting horizontal pivot support at 1.5357. A stop-loss will be activated on a daily close back above the rising trend line, now recast as resistance at 1.5519. The upward slope of the line makes the stop-loss an adversely moving threshold, so we will also introduce a hard stop-loss at 1.5643 to lock in a 1:1 risk/reward ratio in the event of an outsized topside spike.
A move below 1.5357 and the 23.6% Fibonacci expansion at 1.5309 on a daily closing basis exposes the next key downside threshold at 1.4926, the 38.2% level. Alternatively, a reversal through the trend line aims for horizontal pivot resistance at 1.5675.
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