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GBPUSD: More Downside Likely Following Friday Inside Bar

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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. Using anything else will expose you to false signals.

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.

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.

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GBPUSD breakdown of key support level

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9 comments
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ayesha says

inside bar is a reversal signal?

Reply
    Justin Bennett says

    It depends on the context.

    Reply
frank says

you might be surprise by a bullish move up! This thing has been trying to break down past that support. Yes I know lower highs, but this thing has started developing some bullish sign slightly, I would suggest wait for horizontal support to break not the trendline clue…just my 2 cent.

Reply
    Justin Bennett says

    Last Thursday was the breakdown in my opinion. I would never be surprised by a move higher because I plan for either outcome.

    Reply
    Pierre Mifsud says

    This pair has been indeed quite messy…..However from the monthly AMPLIFIED RSI I am confident that this pair will slide at least a further 400 -700 pips or more downwards due to an obligate final retest cycle of a complex wave which had developed in October 2016 that had brought the pair down to 1.179

    Reply
      Justin Bennett says

      Or just the simple techs I outlined above. :p

      Reply
Eliud wachira says

Good analysis……keep up.

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đoàn văn thành says

he is wonderful. A great article. Unfortunately I am in Vietnam, there is no chance to meet you.

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