The GBPUSD has now confirmed that sellers remain in control. The struggle for power was left unanswered last week given the various closing prices from some of the brokers I use.
You may recall that following the break of wedge support on December 15th, our first target was 1.2326. After a brief retest of the 1.2510 handle – a level we were also keeping a close eye on – the pair reached 1.2326 on December 20th.
Nearly two weeks ago on December 21st, I mentioned the idea that a close below 1.2326 would expose the October lows near 1.2090. And the price action over the last 48 hours has confirmed that 1.2326 continues to serve as resistance on a daily closing basis.
For those still searching for a favorable entry, today’s price action may offer a clue.
It appears that the pair is trying to form a base at last week’s low of 1.2200. As such, a close below this level over the coming sessions could present a favorable opportunity to get short.
On the flip side, any additional retest of the 1.2326 area followed by bearish price action could provide an opportunity that’s just as compelling.
The challenge here is going to be finding an entry that allows for a favorable risk to reward ratio. With the 1.2090 handle just 110 pips south of today’s low at 1.2200, it’s going to take patience and discipline to secure an entry with a reward that’s worth the risk.
If nothing sets up, I’ll leave this one alone and look elsewhere. I’m never in a hurry to trade, particularly this week given the holiday liquidity concerns.
Only a daily close above 1.2326 would negate the bearish bias.
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