Is it time for another GBP/USD bounce?
On the technical side the stars – okay maybe just the indicators – are lining up for a bounce. GBP/USD has hit support at the 1.6250 area near a previous resistance and a 50% Fib. Not only that, but Stochastic is almost in the oversold levels. Oh, and price is also near the 100 SMA!
Fundamentally I’m still betting on the strength of the U.K. economy. We might have seen a couple of mixed reports for the past few days but at the end of the day retail sales, employment, and GDP numbers are still healthy and the BOE is optimistic over the economy.
Since I’m trading the daily chart I’m not too shy to wait for a retest of 1.6250 before I enter a position. I learned my lesson from last week’s USD/JPY setup though, so a market entry is still on the table in case I see reversal candlesticks or if Stochastic starts to turn from the oversold region. I’ll probably enter at 1.6250, place a WATR stop, and aim for the previous highs.
What do you think of this setup? Any help would be much appreciated!