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Did GBPUSD just break channel resistance from the May high?
It looks like it to me. It’s a level I’ve discussed several times in recent weeks including last Sunday’s forecast.
Here’s what I wrote:
I’m still opposed to selling GBPUSD given how much ground the pair has lost in recent months.
But it’s going to take a daily close (using a New York close chart) above channel resistance to turn the pair higher.
I also want to see that recent low just above 1.2000 hold as support.
The pair dipped below 1.2000 on Tuesday but closed back above the level into the 5 pm EST close.
With Wednesday’s close above channel resistance, I would expect to see buyers defend the 1.2200/20 area as new support.
If that happens, there isn’t much to prevent a retest of 1.2380.
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And that could just be the start of a larger relief rally.
Remember, GBPUSD has lost significant ground since last April; over 2,000 pips to be exact.
That figure balloons to nearly 5,000 pips when we take into account the July 2014 swing high.
All in all, GBPUSD looks like it wants to head higher.
But it’s going to come down to whether or not buyers can keep the price above former channel resistance (new support) on a daily closing basis.
Do that, and 1.2570 is a very real possibility.