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GBPUSD: Key Test Underway

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Since the June 24th Brexit, GBPUSD has been trading in a relatively tight range. And although the pair managed to rally 680 pips from the multi-year low at 1.2790, buyers failed to breach the key 1.3500 handle in July which was a considerable 1,500 pips off of pre-Brexit levels.

Now that things have settled a bit following the recent decision by the Bank of England to cut rates, I’m back to watching for selling opportunities.

One such opportunity that could garner a lot of attention is developing as I type this. Yesterday’s close below 1.3050 followed by today’s retest of the level as new resistance is a great test for sellers.

It’s also exactly what was intended by my statement over the weekend about keeping a close eye on how the pair responds to 1.3050.

However, it’s important to note that this setup has not yet fully materialized. It’s still developing and is therefore just an idea at the moment.

Before I can consider today’s move tradable, I need to see a daily close below the 1.3050 handle. So until the clock strikes 5 pm EST, there is nothing for me to do but wait and see how well sellers hold their ground.

A move lower from here would encounter support at the July low of 1.2790. Alternatively, a close back above 1.3050 would target the July highs near 1.3500.

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GBPUSD possible bearish trade setup

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4 comments
shafee ullah khan says

Sir, it is a great pleasure for me to writing you, your analysis is very useful for us and we are learning to much from your site. today analysis is also good, but one thing that i want to share with you is the monthly chart pin bar formation, it’s giving me signal that may GBPUSD not come down from 1.2790 and may suddenly start move in the up direction to fill the gape of 1.3678. so sir what do you think?

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Abdullah Alomran says

Hello Justin , I think the pair on Bullish bias above 1.2955. The pair failed to break above its key resistance at 1.3105 (August 4 bottom) and is consolidating on the downside. The relative strength index is below its neutrality level at 50. Nevertheless, a strong support base at 1.2955 (August 9 low) has formed and should limit the downward attempts. As long as this key level is not broken, a technical rebound is expected with the horizontal resistance at 1.3105. A break above this level would open the way to further upside toward the next resistance at 1.3175. Alternatively, a break below 1.2955, look for further downside with 1.2920 and 1.2850 as targets .Best

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Abdullah Alomran says

Hello Justin ,could explain the close of the pair today .Best

Reply
    Justin Bennett says

    Abdullah, I’m not sure what you’d like me to explain. If you have a specific question, I’d be happy to help.

    Reply
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