Timeframe: D1 Recommendation: Short Position
Entry Level: Short Position @ 1.6225
Hedge Level: Stop Buy Order @ 1.6350 (Take Profit Level @ 1.6500)
Take Profit Zone: 1.5850 – 1.5900
Stop Loss Level: 1.6350 (We will not use a stop loss order and execute this trade as advised below)
The GBPUSD has rallied after touching its horizontal support zone as visible in this daily chart (D1). Thiscurrency pair is now trading inside its horizontal resistance zone which is marked in red in the above chart. We expect the GBPUSD to correct back down into its horizontal support zone which is marked in blue.
MACD indicates that momentum is fading, but it remains in bullish territory. We expect the histogram as well as moving average to approach the centerline during the expected correction. RSI is trading nearoverbought territory and suggests the lack of buyers while it has also formed a negative divergence.
We recommend a short position at 1.6225. We also recommend a stop buy order at 1.6350 with a take profit target of 1.6500 in order to hedge our short position and before adding new short positions to this trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.6350. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.5900.
Here are the reasons why we call the GBPUSD currency pair lower:
- The GBPUSD currency pair is currently trading at its horizontal resistance level
- MACD indicates that momentum is fading and bullish pressures are receding
- RSI is trading near overbought territory and has formed a negative divergence
- Profit taking in order to realize trading profits which should fuel the correction
- New short positions by institutional swing traders
Trade recommendations also will be sent to our email address , so we do not get left behind , when there is time and the right conditions for market entry that could bring profit in our trade .
