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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
On Wednesday I wrote about a GBPUSD breakout.
The close above channel resistance at 1.2230 was something I pointed out as a possibility several times in the last couple of weeks.
Given Wednesday’s breakout, we were looking for buyers to defend the 1.2200/20 area as new support.
Thursday’s low was right in the middle at 1.2209.
What followed was an aggressive bullish move up to 1.2353.
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Although GBPUSD bulls didn’t quite reach the next resistance level at 1.2380, they are well on their way.
I’m not seeing any signs of weakness despite the latest three-day 400-pip rally.
Friday’s session is set to close red, but so far, it’s just consolidation.
You can see how Friday’s candle fits neatly within Thursday’s range.
Today’s consolidation is also occurring within the upper half of Thursday’s candle, which is a positive sign for buyers.
But that doesn’t mean GBPUSD won’t pullback next week.
We could still see a rounded retest back to the 1.2200 support area before the next leg higher begins.
Keep in mind too that nothing is certain.
Just because GBPUSD buyers won the battle this week doesn’t mean they will manage to push prices even higher next week.
That’s important to remember, especially while position sizing to keep emotions at bay.
That said, as long as buyers keep GBPUSD above 1.2200 on a daily closing basis, I have to respect the possibility of a move higher next week.