GBPUSD: Trading The Electoral Gap

Yesterday's low did not quite close the gap created by the UK elections. However the trend and resistance levels favour of another attempt lower, whilst we trade below 1.5370

At current levels we could see a quick conclusion to this trade plan. It will either behave, by respecting the bearish trend and confirming a swing high at 1.537, or it will misbehave by breaking this key level.

The bias is down because we continue to form lower lows and highs, the moving average are in sequence and fanning, and we find ourselves below the weekly WS1. The current H4 high is also respect a potential bearish trendline, which could see price create a new low and target 1.529 or even the 1.5241 level (the final close before price gapped up on 7th May).

An alternative scenario is we see a break higher, which invalidates the trendline and quickly becomes a near-term bullish bias. As this is counter trend I would personally step aside but you could consider bullish setups along the broken trendline on lower timeframes.

The likely catalyst will likely by UK GDP data tonight which would require a downward revision to help the bearish bias play out.