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Watch For This British Pound Buy Signal

On May 14 the British Pound futures (June contract) reached its highest point of the year: 1.5821. That was higher than the previous swing high in February, so at minimum the short term GBPUSD trend is looking bullish.

May 28 and 29 have been testing the bottom of a gap which occurred on May 7. Given the uptrend, this could be a support area and potential buying opportunity.  The anticipated support area is between 1.5289 and 1.5233.

Not far below this is the major swing low of 1508 from May 4. If the uptrend is to stay in effect the price should remain above that level.

Two possible entry techniques, which currently occur at almost the exact same price, are to buy a breakout above the short term descending trend line (green), or a break above the May 28 high at 1.5341 (green line).

Figure 1. June British Pound Futures (6B) - 4 Hour Chart

If the long trade plays out the first target is 1.564, just below the May 21 swing high. Next target is 1.574 and then 1.59. The last target is at the top of a projected channel based on if 1.5289-1.5233 area holds as support. The support may not hold, in which case there may be no trade.

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