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GBPCAD is behaving exactly as I thought it might.
I wrote about the heavy price action here on May 30th, a term I use to describe a lack of buying pressure above a key support area.
In the case of GBPCAD, that area is channel support near 1.7020.
Here’s the view from the weekly time frame:
Even the weekly chart looks heavy. Notice how GBPCAD failed to retest channel resistance after hovering above support during the second half of last year.
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However, you can see from the daily time frame below how the pair has continued to save itself from closing below this level since retesting it on May 22nd.
But the lack of buying pressure since that time is indicative of an imminent breakdown.
Furthermore, the early May swing high was the pair’s first lower high since it started its gradual but choppy uptrend in August of last year.
So even if bulls do manage to squeeze GBPCAD higher, I won’t be a buyer.
Instead, I would look to sell near those April lows at 1.7310.
But as it stands, I think the more likely outcome here is a daily close below channel support in the 1.7010/20 region.
Keep in mind that level could be lower. It’s always trickier when you have multiple session lows to deal with as we do with GBPCAD.
I’m referring to 1.6980 and even 1.6900.
Both areas will likely attract buyers on the way down, especially 1.6980.
As such, if you decide to trade the pair, it may be a good idea to keep positions small until GBPCAD sellers clear 1.6980 on a daily closing basis.
I won’t be interested in shorting GBPCAD until we get a convincing close below those 1.6980 lows followed by a retest as new resistance.
If I miss the move lower, so be it. The next runner is just around the corner.
A daily close below 1.6980 would expose the 2018 lows at 1.6600.
Alternatively, if buyers save GBPCAD again and force a squeeze, I will look to sell the pair on a move higher, perhaps in the 1.7310 region.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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