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GBPUSD Channel to Offer Directional Cues

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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.

There have been a ton of quality opportunities lately, and GBPUSD is no exception.

The pair was signaling a break lower at the end of July.

Notice the lower highs into that 1.2380 level between July 12th and the 26th.

Anytime you see a market carving lower highs into support, you can start to anticipate a breakdown.

The same goes for a market carving higher lows into resistance as that usually precedes a break higher.

I mentioned the potential for a GBPUSD breakdown in the July 28th weekly forecast.

More specifically, I wrote that  “a daily close below 1.2380 would expose the 1.2100 handle”.

That was my base case. In other words, I was anticipating the breakdown given the lower highs I just mentioned.

Fast forward to today, and you can see that GBPUSD did reach the 1.2100 support level after breaking below 1.2380.

And now that we have more price action to work with, it appears the pound is also carving a descending channel.

Note how this latest decline caught a bid at the 1.2100 horizontal level which intersects with channel support.

So where to from here?

If the recent action within this channel is any indication, the GBPUSD may continue to attract buyers above this 1.2100 support zone.

Buyers may even take the pair back to the confluence of resistance at 1.2380.

But despite the likelihood of a bounce, I don’t want to buy GBPUSD.

The trend is pointed lower here with the daily and weekly time frames still carving lower highs and lower lows.

As such, I only want to watch for selling opportunities from resistance.

We’ll have to wait and see what comes of this channel, but a retest of 1.2380 in the coming days could offer another chance to get short.

Just keep in mind that 1.2100 is a considerable support level that dates back to October 2016.

So as bearish as things look right now, it’s important to stay patient and not oversize any short positions in case 1.2100 triggers a more significant rebound.

Want to see how we’re trading GBPUSD? 

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GBPUSD descending channel

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20 comments
Justin Bennett says

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    Olokpo Godfrey says

    Justin Bennett is the best thing that have happened to my trading experience.

    Reply
      Justin Bennett says

      Wow, thanks for sharing that. Let me know if you have any questions.

      Reply
Simthembile says

I like your GU trade analysis, I would love to hear your thoughts on the dollar index DXY.

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    Justin Bennett says

    Cheers. I tend to comment on the EURUSD rather than the DXY itself.

    Reply
Sumantra kumar halder says

Excellent analysis

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    Justin Bennett says

    Cheers, Sumantra. Enjoy your weekend.

    Reply
Joe Matkin says

Thanks for the analysis Justin! Have a great weekend 🙂

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    Justin Bennett says

    You’re welcome, Joe.

    Thanks. Enjoy your weekend!

    Reply
Antony says

USD looks like it’s got a strong busllish momentum.

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    Justin Bennett says

    It does, but all moves have retracements.

    Reply
John Paul says

Happy Weekend, Justin. I just want you to know that I am a huge fan of your tremendous work you are doing online. Keep it up.

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    Justin Bennett says

    Thanks for saying that, John. I greatly appreciate it.

    Enjoy your weekend!

    Reply
Rashid says

Justin you are always the best

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    Justin Bennett says

    Cheers, Rashid. Thanks for commenting.

    Reply
Emmanuel Kwofie says

How can i join your academy to learn forex.

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Francis says

Making market decision has been very easy and profitable since I came in contact with Justin.
Thank you sir for giving me hope in forex.

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    Justin Bennett says

    That’s great to hear, Francis. Thanks for sharing.

    Reply
Ambrose Agulefo says

Nice analysis. In addition, the reaction to that channel will go only as far as 2211 area. If GBP price close above it, that’s the only time we will be talking about 2380 area

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