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GBPUSD Buyers Target 1.3440 Following Yesterday’s Breakout

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GBPUSD bulls are on the move this week following Friday’s rejection candle.

The pair had broken above this descending channel back on the 25th of January.

However, buyers were unable to support the elevated prices, and by February 4th, GBPUSD had closed the day back below the key level.

Then came Friday’s bullish rejection candle. I mentioned the pattern in Sunday’s weekly forecast.

It wasn’t the ideal buy signal given the somewhat long upper wick. Even the level in question had failed to serve as support earlier this month.

But as we can now see, Friday’s bounce from the 1.3000 support handle was enough of a technical catalyst to send the pound higher this week.

Yesterday’s 160 pip rally took out a key horizontal level at 1.3200.

This was the location of the late January high. In fact, before this week 1.3200 was the year-to-date high.

With GBPUSD now firmly above 1.3200, any rotation lower will likely encounter support from buyers.

The next key resistance is one I’ve mentioned several times recently.

A look at the price action between May and June of last year illustrates why the 1.3440 area is one to watch.

You can even see how 1.3440 had its way with GBPUSD following the June 2016 Brexit vote.

Notice how buyers failed to clear 1.3440 between late June and early September of 2016.

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I also have reasons to believe that 1.3300 could play a role this week.

Notice the session highs and lows in the last two months of 2017. The 1.3300 area even served as resistance during the second half of 2018.

The GBPUSD is too far extended to think about buying up here, at least in my opinion.

However, a rotation lower to 1.3200 support could offer a favorable buying opportunity.

Keep in mind, however, that resistance lies at 1.3440 with another level at 1.3300 that could affect today’s session.

Last but not least, the pound will continue to be a volatile currency to trade given the ongoing Brexit debate.

If you do trade GBPUSD, you’ll want to stay particularly vigilant.

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GBPUSD bullish candle and rally

Leave a Comment:

32 comments
Mohammed says

Hi jistin can a case be made for the head and shoulders pattern that formed making the 1.32 level the neckline?

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    Ayoola Mathew segun says

    Pls my comment is a question like how many pips will it go against my trend before I know that I should get out of a trade.

    Reply
      Justin Bennett says

      It isn’t a question of pips but rather the market structure at the time.

      Reply
    Justin Bennett says

    Do you mean an “inverse” head and shoulders? It could be, but it isn’t the best pattern I’ve seen.

    Reply
      Mohammed says

      Yes inverse, thanks Justin

      Reply
nadzuah says

great justin

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Praise says

Just on time. Thanks very much sir.

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    Justin Bennett says

    You’re very welcome.

    Reply
aaisha says

can you share your strategy?

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    Justin Bennett says

    What strategy are you referring to?

    Reply
Domitilla Duran says

Thank you for your help

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    Justin Bennett says

    You’re welcome.

    Reply
whatabout says

why not just go short from here instead of chasing 20 or 40 pips more against the swap. pound is like dead whalе anyway and from fundamental point of view the queen may catch the bird flu anytime in the coming weeks so it is better to be seller.

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    Justin Bennett says

    Well then it’s a good thing I’m not a fundamental trader. 😉 I would have lost a lot of money since January if I were.

    Reply
Anya Agwu Igwe says

Gbpusd is a very tricky pair

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    Justin Bennett says

    They’ve all been tricky pairs so far this year.

    Reply
Adebayo Saheed says

Kudos Justin

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Polys says

Hi Justin, Thanks again for the analysis. It might sound crazy but the above chart doesn’t remind you The Cup and Handle pattern?

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    Justin Bennett says

    It could be, but it’s a tough argument to say the last six to eight months have formed a continuation pattern rather than a reversal.

    Reply
Bokanf says

So are you adding to the long position or you would consider a retest or pull back?thank you

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    Justin Bennett says

    I don’t share what I’m doing on the free site.

    Reply
Benjamin says

Well said and done .great analysis

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Anya Agwu Igwe says

my account is blown yesterday by gbpaud

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Collins says

Thanks. This is very helpful

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    Justin Bennett says

    You’re welcome. Glad you think so.

    Reply
Peter promise says

Great Justin.. God bless you.

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    Justin Bennett says

    Thanks, Peter.

    Reply
ramzy says

Great effort

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Pierre Mifsud says

Hi Justin……see things different from you. On the 4 hr time frame I see it moving down to the 1.2912 whilst on the daily time frame I see it down to the 1.28 handle….We will see……With all this uncertainty in the UK I am surprised why we are not in the 1.25 range as yet, or lower…….

Reply
    Justin Bennett says

    We’ll see what the new week brings.

    Reply
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