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GBPUSD buyers pushed prices higher yesterday following last week’s 130 pip gain. The 1.3587 close puts the pound above the former resistance level at 1.3545.
I mentioned this level over the weekend. The idea was to wait for either a pullback into 1.3445 support or a daily close above 1.3545 resistance.
With the break above 1.3545 behind us, traders can begin watching for buying opportunities on a retest of the area as new support.
Although I don’t trade or teach it, the price action since late September does resemble a cup and handle formation. It’s a bullish continuation pattern that occurs within an established uptrend, which is undoubtedly the case here.
The dip between September 20 and November 30 is the cup, and the consolidation in December is the handle. My only reservation is that the start of the handle (1.3545) is lower than the beginning of the cup (1.3650).
If it is a cup and handle pattern, Tuesday’s close confirmed the setup. That places a 500 pip target above 1.3545 or somewhere near 1.4000, which served as support in April and June of 2016.
A more immediate concern, however, is the 1.3650 resistance area. As the 2017 high, I would be surprised to see the GBPUSD break it without sellers putting up a good fight.
A daily close (New York 5 pm EST) above 1.3650 would expose the February 2016 low at 1.3835. Alternatively, a close back below 1.3545 would negate the bullish bias and re-expose the 1.3445 support area.
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God
can go to 1.4000?
Can it? Yes.
Will it? We’ll see.
In paragraph 7 of your commentary, typographical error 1.3650 and not 1.2650 as resistance
Thanks for catching that.
Your analysis are on point most of the time. I look out for your posts above others.
Pleased to hear it.
“With the break above 1.3545 behind us, traders can begin watching for buying opportunities on a retest of the area as new support.”
On a retest – even today, not waiting for confirmation candle?
Why assume a “buying opportunity” isn’t confirming price action?
How do you define the term? If it’s a pin bar, then there you go. It depends on the rules you’ve set for yourself.
Maybe I have missed something. I do not know what rules to set for myself 🙂 I have learned that it is best to have confirmation candle. But thought – maybe you mean this time it is so good oportunity that we do not even need to wait. The bad thing with bullish pinbars is that once it formed, we had lost some value. When pinbar forms – it first goes down – best price to buy, and then rises – worse price to buy.
I cannot create my rules, because my rules do not work 🙁
You need some rules regardless of whether you’re profitable or not. Otherwise, how will you know what works and what doesn’t?
As for the GBPUSD, I’m waiting for confirming price action.
I should be able to check my history. Only bad thing that it currently is hard to filter, I just write my reasonings in word documents. I should have some database where there would be some rule column, which I would set to true when using that rule, and then filter the results where that rule was used and when it was not used. But also that might need big sample of data, maybe it might take years, so that I would be sure that it was not coincidence that it worked, so still not sure.
Haha…I have been watching this Cup and Handle since September last year in one of GBP’s sister pair.
Anyhow, key reversal signal is the key…..
Hi Justin;
On the daily chart the price is far from the MEAN?
But on the 4 hour chart the price is currently on the MEAN.
Is it a good thing to look for bullish signal in this time frame?
I know you like the daily chart but you also trade both charts (4 Hour and Daily chart)
Hi Sam, I only pay attention to the 10 and 20 EMAs on the daily chart. Price is a bit overextended at the moment, which is part of the reason I’m waiting.