Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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However, Friday’s bullish pin bar suggested that the 1.3300 resistance area would likely come under pressure once again this week. Sure enough, yesterday’s high tested descending channel resistance at 1.3292.
Here’s what I wrote on Sunday:
It’s going to take a daily close (New York 5 pm EST chart) above 1.3300 to attract additional buying pressure. Above that, we have resistance at 1.3460 followed by 1.3600.
Alternatively, bearish price action from 1.3300 could keep the pound contained for a few more days.
We certainly haven’t had a daily close above 1.3300 yet. But the GBPUSD did carve a bearish pin bar during yesterday’s session. So, as I wrote on Sunday, it seems the pound is set to remain within this channel for a few more days.
It’s important to keep in mind that the price action since the beginning of June is nothing more than consolidation. That means you’re probably better off aiming for short-term trades or none at all.
Personally, I prefer waiting for the breakout. I’m more interested in catching a move that lasts for a few hundred pips than trying to extract 30 or 40 pips here and there. But to each their own.
Key support comes in at the year to date low of 1.3050. I’d also expect a few buyers to appear near last week’s low of 1.3100.
The 1.3300 area is still intact as resistance. A close above that would expose 1.3460 followed by the 1.3600 area.
Last but not least, keep in mind that a descending channel following a downtrend usually results in a move higher. It signals exhaustion similar to that of a falling wedge pattern, so stay vigilant if you do attempt shorts from the 1.3300 region.
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