I would like to take a close look at GBP/USD and how we could potentially trade it with the UK GDP figures about to be released for the second financial quarter.
I have been looking for a pull back in GBP/USD from the start of this trading week to enter a sell position and make a lower high on the weekly chart to encourage sellers. In Monday’s US trading session, my wish was granted as GBP/USD managed to get a reversal of price to 1.5594 and I entered short at 1.5589 and currently have a small gain of around 40 pips in profit.
Looking at this chart over the weekend my trade plan was based solely upon price holding the thicker red trend line below which is essentially holding the previous uptrend structure and price re-tested and rejected it very well.
Ideally, I am looking for follow through to the downside and closing below 1.5480 should open the door for sellers with the blue lines below as my soft targets.
With the upcoming news my stop loss has been moved to 1.5608 and now I need price action to stay below 1.5594 before the news event at 9:30 GMT.
The chart below really highlights the breakout areas if we do see a surge or spike in either direction.
Looking for safe ways to trade this pair after the news tomorrow will be at the forefront of all GBP/USD traders after the news release.
For those not already positioned short, a higher time frame close under 1.5480 with good momentum should expose the 1.5300 level if we can break 1.5540, which currently offers excellent support.
Alternatively, if we do manage to move higher and break Monday’s high we should look for the bulls to test 1.5637 and 1.5666 again for further confirmation to see if the price wants to test near the yearly highs.