It’s no secret that GBPUSD has been under pressure since April.
The pair is down 1,700 pips following the 2,500 rally that commenced in October of 2016.
More recently, the pound has struggled since closing below the 1.2700 handle on December 10th.
The fact that GBPUSD buyers have struggled this week each time they reach the 1.2700 region is no surprise.
The 1.2700 area previously held as range support since mid-August.
However, I want to caution shorts here.
The 1.2700 level is indeed acting as resistance. You don’t need to be an experienced price action trader to see that the area is attracting sellers.
Despite the selling pressure, I’m not bearish GBPUSD.
In fact, I’m quite neutral as I have been since the pair rebounded so aggressively on December 12th. That session, by the way, carved a bullish engulfing pattern.
The primary reason I’m not shorting GBPUSD has to do with the way the pair has hovered just below 1.2700.
In my experience, a market that refuses to sell off from key resistance is one that’s on the verge of breaking higher.
The same goes for a market that refuses to move higher from a key support level.
Buyers haven’t done it yet, but I would not be surprised to see GBPUSD close back above 1.2700 over the coming sessions.
That said, it’s important to keep in mind that there are no guarantees.
This is all just speculation for now, and as long as the pair is below 1.2700 on a daily closing basis, this market is vulnerable.
A close back above 1.2700 would expose 1.2880 followed by 1.3070. Key support is down near 1.2560.
I don’t expect much action over the next couple weeks given the holiday season.
Then again, this is Forex so anything is possible.
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