The GBPUSD has rallied from its support area, marked in light blue in the above H4 chart, into its resistance area which is visible in light grey. This currency pair was unable to break out above its resistance area and started to trend sideways. The Bollinger Band has confirmed the sideways trend as all three bands are trending sideways as well. The upper band is located inside the resistance area and the lower band as well as middle band are trading below it.
The sideways trend could invite a profit taking sell-off as forex traders may opt to realize floating trading profits by exiting their long positions. The GBPUSD is trading between the middle band and the upper band of the Bollinger Band forex indicator; a breakdown below the middle band is expected to result in the addition of new net short positions which will further add to the sell-off. The risk for this currency pair remains for steep sell-off.
Forex traders are advised to enter short positions at 1.5470 and above in order to be well position for the expected profit taking sell-off in this currency pair and a break in the up-trend. Conservative forex traders should wait for price action to break down below the middle band of its Bollinger Band Indicator which will increase selling pressure. A take profit target of 1.5100 has been selected for a potential trading profit of 370pips.
Forex traders should protect this trade with a stop loss level at 1.5600 for a potential trading loss of 130 pips which will result in a Risk-Reward (RR) ratio of 2.85.
Short @ 1.5470
TP @ 1.5100
SL @ 1.5600
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