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GBP/USD Bounces From Daily Lows. Can a rebound last?
DailyFX.com -
Talking Points:
GBP/USD Reverses Off Daily Lows of 1.2081
Short Term Price Action Suggests a Retracement is Underway for the Pair
Looking for additional trade ideas for the GBP/USD and other Currencies? Check out our Pound Trading Forecast
The GBP/USD is currently rebounding this afternoon, trading off of the lows of the day at 1.2081. This morning’s move saw the pair decline as much as 160 pips and test the Cables previous swing low at 1.2087. Now, with the pair rebounding, traders are looking to see if the GBP/USD may remain supported or if the Cable is prepared to drop down and trade towards a new lower low.
GBP/USD 1 Day, Rebound
(Created using TradingView Charts)
As prices rebound off of daily lows, traders may look to short term momentum cues to help decipher the GBP/USD’s next move. Using the 5-minute graph below, the Grid Sight Index (GSI) has identified a short term downtrend forming, as the pair has lower off of the most recent swing high at 1.2205. After reviewing 94,120,441 pricing points, GSI has also indicated that price action has continued to decline by 15 pips or more in 64% of the reported 253 matching historical events. This places the first bearish historical distribution point at a price of 1.2156. A move to this value may indicate a return towards bearish momentum and open the pair to test the next short term swing low at 1.2147 as well as daily low of 1.2081
Alternatively, GSI has indicated that prices have increased by 31 pips or more in 40% of the identified historical instances. This places the first bullish historical distribution at a price of 1.2202. A move through this point would indicate a continuation of this afternoon’s bullish reversal. If prices continue to rise, it opens up the possibility that the pair may attempt to trade back towards this morning’s open of 1.2237. It should be noted that the final bullish distribution below is displayed at a price of 1.2247. A move above this point may suggest a larger retracement or reversal is in play for the pair.
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