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GBPUSD Bearish Pin Bar Keeps Prices Contained

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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Last Monday we watched as the GBPUSD sold off at the confluence of resistance at 1.3300. I discussed this area just 24 hours beforehand in the July 8th weekly forecast.

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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GBPUSD daily time frame

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11 comments
Andrew says

… so what is your interpretation of the fact that the day prior to the bearish pin bar we had a bullish pin bar? Consolidation?

Reply
    Justin Bennett says

    In this case, the consolidation via the descending channel takes precedence, so there isn’t much to interpret with regard to Friday’s candlestick.

    Reply
rojam says

nice reverse H&S pattern also formed…could be a catalyst for a move higher.

Reply
    joe says

    Which time frame?

    Reply
nadzuah says

nice justin

Reply
Roy says

Nice

Reply
Peter says

Thanks mentor, but do you consider the strength of a currency pair when factoring in your analysis? E.g USDindex?

Reply
    Justin Bennett says

    I like to keep things simple, so I only look at the chart in front of me. In this case, it’s the GBPUSD.

    Reply
      Peter says

      Thanks.

      Reply
Felino Ignacio says

50 pips gaining and still going.

Reply
Abas says

hi .. what is more important then technical analyze and fundamental ?? because i have no idea what happen to GBP USD yesterday !!! who know the hidden secret , plz tel me also .. thank you

Reply
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