US dollar recoups losses against British Pound

Post news reaction has faded and gbp/usd is retracing after briefly going over 1.5700 level. You may actually see a reversal pattern on 15 minute chart. It is often called an M pattern, which indicates that the move up is stalling and a reversal is taking place. It is most effective if the second top does not reach previous one and the pattern itself does not last longer than 2 hours. In this case it was around 2 hours. 

The selling signal occurred when 12:30 GMT (15 minute) candle closed. You would have opened a short around 1.5689 level (depending on your broker spreads) with a stop loss order at 1.5720. It might be a little bit too big for a day trade, but remember that you can always move your stop when the trade starts working in your favor. 

Take profit could be around 1.5660-1.5650  (50 percent retracement from the peak). Price is slowly approaching the level. At this point one can actually move stop at break even. 

After today’s move we can state that bullish bias has gotten stronger and Pound may finally overcome 1.5700 level tomorrow or by the end of the week. I am waiting for the pair to dip to buy it.

Reversal pattern M on 15 minute chart

Dollar bulls break Pound

Dollar bulls have been beating Pound since the start of European session. However, gbp/usd has gone around 100 pips for today and that is close to average daily range for the pair. Another point in favor of a reversal is that the pair has just reached and went a little beyond Friday’s lows. From daily perspective that is an extreme point and a bounce is highly likely. 

One more point in favor of a reversal upwards is the fact that most moves in major currency pairs stall around 16:00 GMT when big market sharks take their profits for the day or even reverse their positions. So, I assume the low for today has been made and now we need to wait for some candle reversal pattern. 

Oh, yes. I almost forgot one more point that supports my idea about gbp/usd turning around and starting rising! It now sits on 200 sma on 1 hour chart. That is a strong argument for closing all shorts and contemplating a long. Let’s wait some 45 minutes to get some confirmation whether big short positions are being closed or not. Next support level is just 5 pips lower at 1.5575. 

British Pound reaches and breaks Friday’s low