The GBPUSD has broken the confluence of resistance at 1.2410/20 on an intraday basis. We discussed this area over the weekend as one that could give way to higher prices if broken.
I also mentioned last week’s bullish engulfing candle, which is the reason I ignored yesterday’s bearish rejection from the 1.2410 handle. It’s a good thing I did as the trade would have resulted in a loss.
In addition to the horizontal level at 1.2410, there is also a channel resistance that extends from the current 2017 high of 1.2705. Combine that with a 50% retracement when measuring from 1.2705 to 1.2108, and we get an area of confluence worth our attention.
At the moment the pair has closed above this area on a 4-hour closing basis. But an area with this much significance requires a daily close (5 pm EST) above it to signal a breakout. At least that’s my requirement.
So if buyers manage a daily close above 1.2410/20, traders can begin watching for buying opportunities on a rotation lower.
The next (minor) level of resistance comes in at the February 24th high of 1.2568. A close above that would expose the current 2017 high near 1.2670.
Alternatively, a daily close back below 1.2410/20 would negate the bullish outlook. From there the next support would come in near 1.2340 followed by 1.2215.
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