Is the GBPUSD downtrend finally coming to an end after nine months of selling pressure and a loss of 2,600 pips?
I wouldn’t go that far, at least not just yet.
However this week’s price action does at least suggest that the pair may have found a short-term bottom. But the biggest test for the bulls has yet to come.
That hurdle will come on a retest of the key 1.4980 handle. This area can be seen acting as support to start the year and later acting as resistance on several occasions between March and early April.
The daily time frame paints the picture.
Clean levels such as these make our job as price action traders that much easier. From here we can watch for a 4 hour close above 1.4980 to confirm the breakout. The trade opportunity will come on a retest of the level as new support. Resistance comes in at 1.5200, giving us about 200 pips to work with.
Alternatively, any bearish price action on a rejection of 1.4980 would have us looking lower. However only an extremely obvious rejection will do as the U.S. dollar seems poised to give back some of its gains.
Summary: Wait for a breakout above 1.4980 on a 4 hour basis and then watch for bullish price action on a retest as new support. Key resistance comes in at 1.5200. Alternatively, bearish price action at the 1.4980 handle would have us looking lower to 1.4868.