GBP/USD – Long Trade Idea
GBP/USD is currently resting on a critical daily support at around 1.22380.
Prices are currently rejecting from this area, potentially signifying a bullishing push to come. However, even though prices are sustaining themselves above the weekly support, it is struggling to break above the 200-day EMA at 1.22558.
Price is now testing this EMA once again, a break and close above could see a push towards the next weekly resistance level at 1.22980, and is therefore an ideal entry area.
If prices fall back towards the support and close below, this trade will no longer be applicable as it likely this pair will fall further.
A new UK tarrif regime plan has opened the possibility of a UK-EU trade deal.
This new tariff regime , has allowed the EU rights to keep the same tariffs rates on key trade sectors such as agriculture and automobiles. Thus the UK has shown signs of moving from their strict negotiating stance, which thus far has lead to three rounds of unsuccessful negotiations with the EU.
The Sterling may appreciate as hopes for a potential trade deal by the year end increase. However the EU still remains adamant about its demands and has not shown the same level of flexibility, therefore any updates on this negotiation will be a significant price driver for this pair.
Potential Entry: When/If prices are able to break and close above the 200 day EMA at around 1.22558.
Potential Stops: At around 1.22230
This trade idea carries a risk to reward ratio of 1.74, with a maximum potential loss of 40 pips and a maximum potential gain of 70 pips. We strongly advise you place stop losses at entry once a trade is at least 15 pips in profit.
- TP1 has been achieved. Prices have reached the TP1 level at 1.22800, this is around 25 pips from the proposed entry. At this point it is encouraged to move stop losses at entry and take partial profit.
- TP2 has been achieved. Prices have reached the TP2 level at 1.22950, this is around 40 pips from the proposed entry.
- After achieving TP2, prices fell back to entry. This trade is now closed with 40 pips closed as a partial trade close.