GBP/USD Daily Price Forecast – 5th May 2025

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Trade Summary:

GBPUSD
Sell Stop @ 1.32586
TP @ 1.32166
SL @ 1.33355

GBP/USD Analysis (H4 Chart)

Overview

The GBP/USD chart provided is a 4-hour (H4) timeframe, showing a bearish setup with key levels marked for a potential sell trade. The chart includes moving averages and horizontal support/resistance levels, which are critical for technical analysis.

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Key Observations

• Trend Analysis:

  • The pair appears to be in a downtrend as indicated by the lower highs and lower lows.

  • The price is trading below the 50-period moving average (yellow) and the 200-period moving average (red), which confirms bearish momentum.

• Sell Setup:

  • Sell Stop Level: 1.32586

    • This level is below the current price, indicating a pending sell order to be triggered if the price continues to decline.

  • Take Profit (TP): 1.32166

    • The TP level is set close to a previous support zone, where the price may find buying interest.

  • Stop Loss (SL): 1.33355

    • The SL is placed above a recent resistance level, providing a buffer against potential price retracements.

• Support and Resistance Levels:

  • Resistance: 1.33355 (aligned with the SL level).

  • Support: 1.32166 (aligned with the TP level).

• Moving Averages:

  • The 50-period moving average (yellow) is sloping downward, indicating short-term bearish momentum.

  • The 200-period moving average (red) is also trending downward, confirming a longer-term bearish bias.

• Candlestick Patterns:

  • Recent candlesticks show indecision and bearish pressure, with wicks on the upside and smaller bodies, suggesting sellers are in control.

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Trade Analysis

• Risk-Reward Ratio:

  • The distance between the entry (1.32586) and the SL (1.33355) is approximately 77 pips.

  • The distance between the entry (1.32586) and the TP (1.32166) is approximately 42 pips.

  • The risk-reward ratio is approximately 1:0.54, which is not ideal. Traders may consider adjusting the TP or SL to improve the ratio.

• Market Sentiment:

  • The bearish setup aligns with the overall downtrend, suggesting that the trade is in line with the prevailing market sentiment.

• Confirmation:

  • A break below the Sell Stop level (1.32586) with strong bearish candlesticks would confirm the trade setup.

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Potential Risks

• False Breakouts:

  • The price may trigger the Sell Stop order but fail to sustain below the level, leading to a reversal.

• Economic Events:

  • GBP/USD is highly sensitive to economic data releases (e.g., UK and US interest rate decisions, inflation data). Unexpected news could invalidate the technical setup.

• Support at 1.32166:

  • The TP level is near a strong support zone, which could lead to a bounce.

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Conclusion

The GBP/USD pair is showing a bearish setup with a Sell Stop at 1.32586, TP at 1.32166, and SL at 1.33355. While the trade aligns with the downtrend, the risk-reward ratio is less favorable. Traders should monitor price action near the Sell Stop level for confirmation and remain cautious of potential reversals or economic news that could impact the pair.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It's widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it's easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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