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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do not overlook the article 50 triggering next week by the british gov in order the brexit process to begin
i.e.
be careful with longs in the cable
It’s certainly something to keep an eye on.