The chart provided is a 4-hour (H4) timeframe for GBP/USD, showing a bearish setup with key levels marked for a potential sell trade. The analysis includes a Sell Stop order, Stop Loss (SL), and Take Profit (TP) levels.
Key Observations
Trend Analysis:
The price is trading below the 50-period Moving Average (yellow) and the 200-period Moving Average (red), indicating a bearish trend.
The recent price action shows lower highs and lower lows, further confirming bearish momentum.
Sell Stop Order:
A Sell Stop is placed at 1.34759, below the current price level. This suggests anticipation of further downside if the price breaks below this level.
Stop Loss (SL):
The Stop Loss is set at 1.35400, above the recent swing high. This level provides a buffer in case of a reversal, protecting against unexpected upward movement.
Take Profit (TP):
The Take Profit is set at 1.34407, targeting a key support level. This level aligns with previous price action, where the market found support.
Support and Resistance Levels:
Resistance: The area around 1.35400 acts as a strong resistance zone, as it coincides with the recent swing high.
Support: The 1.34407 level is a significant support zone, as it aligns with previous price reactions.
Bearish Crossover:
The 50-period MA has crossed below the 200-period MA, forming a "death cross," which is a strong bearish signal.
Trade Setup
Entry: Sell Stop at 1.34759.
Stop Loss: 1.35400 (above resistance).
Take Profit: 1.34407 (near support).
Risk-Reward Ratio
Risk: The distance between the entry (1.34759) and the stop loss (1.35400) is 64 pips.
Reward: The distance between the entry (1.34759) and the take profit (1.34407) is 35 pips.
Risk-Reward Ratio: Approximately 1.8:1, which is acceptable for a short-term trade.
Conclusion
The GBP/USD pair is showing bearish momentum, supported by moving averages and price action. The trade setup is well-structured, with a clear entry, stop loss, and take profit. However, traders should monitor key economic events and news that could impact the pair, such as interest rate decisions or geopolitical developments.
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