GBPUSD: A Word of Caution to Shorts

by Justin Bennett  · 

December 21, 2018

by Justin Bennett  · 

December 21, 2018

by Justin Bennett  · 

December 21, 2018


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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GBPUSD support and resistance levels


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25  Comments

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  1. This is all true. Excellent.
    I always follow your posts and also recommend it to my friends.
    Sir, I need your assistant personally, I will me glad if that’s possible. Thanks

  2. Hi, 12/21/2018
    Thank you very much, for all your knowledge and the market. God bless you and your family. Merry christmas & happy new years.

  3. Bulle oder Bär?????Jetzt ehr Bär, hat gerade im H4 20 EMA und 10 EMA durchbrochen, der Brexit macht alles möglich.
    Danke Justin für Deine Analysen, lerne immer dazu.
    Habe die Mitgliedschaft Tagespreisaktion bezahlt, Du hast mich überzeugt!!!

  4. I agree with you 100% because you come across as a contrarian. Remaining neutral on cable is the best response I can advise for now, but I think a catalyst would trigger GBP/USD to rise past the 1.2700 resistance to near 1.2880 in the New Year before going back down. The Brexit cloud and the U.S economic slow down may be responsible for the rise of Cable.
    I’m expecting that rise .

    Sincerely,

    Mike.

  5. Justin;

    When, if ever, do you see them coming to a resolution when it comes to Brexit? Do you think the GBP pairs will ever be tradable again? All these questions, I know you don’t have a “crystal ball” but you probably understand the market better than most! That being said, I’d truly like to read your opinion.

  6. I have been studying this pair in great detail. I specialize in wave harmonics for 15 years but sincerely in 95% of the cases I agree with you, Justin….You are really one great mentor, indeed! However, before the pair overcomes the 1.2700 handle as resistance, the pair is still bearish.

    On the monthly pattern I see much more potential for further decline in fact till the first half of 2019. At the moment it is slightly above the 1.27 fibonacci ratio down ( actually at the 1.24 fibonacci ratio) and in my opinion finally heading for the 1.618 fibonacci ratio at the 1.1200 handle. So potentially it can roll down a further 1400 pips.

    This loss can also be confirmed by the DXY (Dollar strength index) which is signalling 97 at this time of writing….in a few months time harmonically the dollar will minimally reach 99.13 which explains also this drop and why EURUSD is to reach the 1.09 handle….

  7. So you mean to say a daily close below a key support and resistance itself is still not a guarantee? I can see there are still lots of factors to be considered aside from a NY Daily Close, and a daily close can still be a false break.

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