GBP/USD - Possibility for long positions with solid risk/reward ratio

GBP/USD Our Expectations: Rising trend, correction to horizontal and diagonal support. Possibility for long positions with stop 1.3408.

Alternative scenario: If the price cannot maintain positions and goes below the supports, we could seek entry for short positions after a successful test of the breakaway and a price action signal.

Commentary: The formation of a double top sent Cable back to key support levels. The price is at multiple diagonals and horizontals, as well as 200 SMA. The correction of the trend, which started at March the 1st 2017 reached 38.2% Fibo. Price action signal of a pin bar at support levels. For a more precise entry, we wait for the price to go above the high of the previous bar.

As Donald Trump pulled the U.S. out of the Iran nuclear agreement, we can see an allocation of money flow toward risk off assets, as JPY, Gold, Oil. This decline in risk appetite will also lead to a weaker greenback. Tomorrow we expect Bank of England's Interest Rate Decision. Despite the decline in chances for a hike this month, a surprise move from the central bank will send the GBP soaring, supporting this forecast.

SL: 1.3408

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