The GBPUSD has deteriorated sharply after breaching its 200 DMA to the downside. Over the past few sessions this pair has formed a bearish price channel as visible in this H4 chart. Currently the GBPUSD trades around the descending support line and has tried to form a bottom over the past two trading days. We expect this pair to rally into its descending resistance level before breaking out and into its 200 DMA.
MACD has indicated bearish momentum and confirms the recent correction. We expect this indicator to be the last one to turn bullish which should be close towards the end of this Bull Run. RSI has traded in extreme oversold territory and a breakout should accelerate the rally.
We recommend a long position at 1.5875 with an additional entry point at 1.5640. This is an addition to the open hedge which was opened at 1.6320. We advise traders to hedge the initial position before adding to long positions. Should this pair breach 1.5800 to the downside we recommend an additional hedge with a short position before committing new trades to this group.
Traders who wish to exit this trade at a loss are advice to place their stop loss level at 1.5800. We do not use stop loss levels and will execute this trade as recommended. Place your stake profit level at 1.6100.