Daily Price Action

GBPUSD Moves to Challenge 1.4670, Breakout Imminent


GBPUSD just won’t go away despite the endless headlines surrounding Brexit fears. The pair is moving to challenge the 1.4670 handle for the fourth time in four months.

Under normal circumstances, we’d call this a range and look to sell bearish price action at resistance. However, there’s something at work here that should be concerning if you have bearish intentions.

Since the February 29th low at 1.3834, the British pound has gained 770 pips against the greenback. But what’s more telling is how the pair has gone about it, more precisely the price structure that has been forming since the April low.

Any time a market carves out higher lows into resistance, it’s often best to stay away from the short side.

Over the years, I’ve seen patterns such as this eventually break to the upside more often than not. The inverse applies to a market making lower lows into support.

The big concern with the pound is, of course, Brexit. But whether that prevents you from opening any new positions is dependent upon your plan/style of trading rather than the current technical landscape.

In other words, from a purely technical perspective, a daily close above 1.4670 could extend the current rally toward 1.4870 and possibly 1.5120; the latter being a level I mentioned at the end of last month.

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GBPUSD higher lows into key resistance level

Leave a Comment:

Leonel Ruiz says

I just took a lost on gbpusd 30 pips, went long at 14614 to take profit at 14639 and it only made it 146165, i thought i was going to come out even but it went south as soon as the stock market open, it influence forex, one way or the other. 5/24/16

Sam says

Justin, another issue is Britain economic data. Even with positive outcome in June referendum, Uk will still require additional stimulus. Fundamentally, I don’t think pound have what it takes to sustain current gains against the US dollar. Only if the politicians continue to make similar remarks like they did yesterday, but either way I expect this surge to be short-lived as long as 1.4672 holds.

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