GBPUSD defends the crucial support

Cable starts the new week on the front foot. On Monday, the price managed to climb to the highest levels since the 23rd of November.
Tomasz Wiśniewski
GBP

The optimism is a result of the latest developments from the Brexit pit, where according to Theresa May, No Brexit is more probable than the no deal option. Fundamentals are very much in line with the technical analysis and this situation is always more than welcomed by the traders on the currency market.

As I am mostly the technical trader, in this paragraph, I will focus on this type of the analysis. GBPUSD is largely influenced by the double bottom formation from December and January. This reversal formation always has a neckline and the breakout of that neckline is a trigger to go long. In our case, this neckline is the horizontal area around 1.2815 (orange). That resistance was broken on Friday and that was the first sign of the optimism. Later, broken resistance was successfully tested as a support and that proved the buy signal.

From the price action point of view, the buy signal here is very strong. Additionally, it has a great risk to reward ratio. In theory, stop-loss order should be placed below today’s lows and the take profit is on the black line connecting long-term lower highs. That gives us a potential profit being three times bigger than the potential loss. The positive sentiment stays here as long as we are above the orange line. Price dropping down below that support will create a false breakout pattern and will be a legitimate signal to go short.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US