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Two weekends ago, I pointed out a descending channel on GBPUSD.
I mentioned on Sunday that it looked like the pair broke resistance last week, but I was waiting for something more convincing.
Today’s 170 pip rally is undoubtedly that.
The challenge now is that the GBPUSD is testing a key resistance level at 1.4000.
That area is likely to attract sellers, given how it served as resistance in early March.
If it does, we could see the GBPUSD rotate lower before breaking above 1.4000.
One scenario calls for a pullback into the recent highs near 1.3900 before pushing higher.
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Of course, all of this depends on where today closes at 5 pm EST.
A close above 1.3900 would be ideal for buyers, in my opinion.
At the same time, it’s going to take a daily close above 1.4000 to open the door to the next key resistance at 1.4150.
If we do see GBPUSD rotate lower from 1.4000, it’s going to take a close back below 1.3900 and the 1.3700 region to reverse the bullish trend.