GBP/USD distribution to target 1.3000

Quite a few signals suggesting GBP/USD is ready for a short term fall back to test 1.3000.

GBP/USD

GBP/USD – Daily chart also confirming price at 61.8% Fibonacci retracement and in overbought territory supporting the thesis. Once price hits target 1, it would be wise to book partials or move stop to break even.

 
GBP/USD
Key Points:

  • Price hits major resistance 1.31445 made back in August
  • Divergence in RSI and price
  • RSI cutting down through 80 extremes over bought
  • Volume dropping off towards the high
  • Daily – Fibonacci 61.8% retracement (September high – September low range)

 
Key Levels:
Support – 1.30640, 50 EMA, 200 EMA, 1.3000
Resistance – 1.31760, 1.31445
 
Entry Zone:
Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.
Optimal Entry – 1.31400
Supporting Entry – 1.3130
 
Candle Reversals for entry

  • Bearish Shooting Star
  • Bearish Engulfing
  • Bearish Dark Cloud Cover

Bearish Candlesticks
The Risk:
As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.
If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.
 
IF: Price breaks above 1.31872 – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.
 
Reward / Reward Targets:
Optimal Entry 1.31400 – Target 1 1.30640 = 1.5x Reward to Risk
Optimal Entry 1.31400 – Target 2 1.3000 = 3x Reward to Risk
Supporting Entry 1.3130 – Target 1 1.30640 = 1x Reward to Risk
Supporting Entry 1.3130 – Target 2 1.3000 = 2.2x Reward to Risk

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