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Over the weekend I discussed how the GBPUSD is likely in need of a pullback before the next leg higher can begin. The same goes for the EURUSD.
Both pairs are trending lower to start the week with the GBPUSD off of Friday’s close by 60 pips. Buyers didn’t quite make it back to the 1.4070 resistance area, but today’s high of 1.4049 is relatively close.
If you’re still in search of a way to trade pound strength or weakness, the 4-hour price structure below might help.
While it is true that the broader trend is still bullish, the smaller ascending channel within the larger descending channel hints at further weakness.
As I mentioned yesterday, I believe that the EURUSD and GBPUSD need to cool off some before buyers are ready to have another go. Both have experienced considerable gains in recent weeks including the pound’s 900 pip rally in the second half of January.
From a technical standpoint, if GBPUSD sellers can close the pair below ascending channel support near 1.3850, it would expose the 1.3600 support area. Both are horizontal levels that I’ve had on my chart for several months.
On the flip side, a close above descending channel resistance could offer an opportunity to get long. That said, I would like to see some additional consolidation and a 1.3600 print before I consider buying the GBPUSD.
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