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GBPUSD broke a key support area last week.
In fact, the pair breached two key support levels last week.
The first was ascending channel support near 1.3050, and the other was the horizontal level at the 1.3000 handle.
As a sign of the market’s intent for this week, GBPUSD also carved an inside bar last Friday.
To be fair, the holiday weekend is playing a role here.
If it weren’t for the holiday lull, we probably wouldn’t have such narrow daily ranges.
But the price action for GBPUSD since Thursday is still indicative of further downside in my opinion.
And Thursday’s low at 1.2978 giving out presents a possible selling opportunity for a move to the next key support at 1.2800.
The 1.2800 area served as support in mid-February. It’s also the 61.8% Fibonacci of the year-to-date range.
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I would keep positions relatively small, though.
Not only are we dealing with the volatile British pound, but candlestick signals that form in a low liquidity environment are sometimes less reliable.
A move above Friday’s high at 1.3009 would be a sign of short-term strength.
It would also signal the likelihood of a retest of former channel support as new resistance. Right now that level comes in near 1.3070.
I’ll stay bearish GBPUSD so long as the pair is below that 1.3070 region.