Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
The GBPUSD is testing a key resistance level today.
On August 20th, I wrote about the potential for a bounce from 1.2100 as well as the target at 1.2300.
The latter was descending channel resistance in the chart below.
So far, today’s session has hit a high of 1.2309.
There’s plenty of time left for buyers to clear this area into the daily close at 5 pm EST, but I do expect sellers to put up a good fight.
You can see how significant this descending channel has been since its inception earlier this year.
If buyers can close GBPUSD above that 1.2300 area, we could see the pair trend higher this week toward 1.2380.
Note that 1.2380 is the July 17 low.
That said, I would expect to see GBPUSD significantly higher if buyers can clear 1.2300 resistance this week.
Alternatively, bearish price action such as a pin bar from 1.2300 would keep sellers in control for now.
But a word of warning here…
This channel is well-worn. And a descending pattern such as this will, at some point, trigger a relief rally.
With that in mind, I’m not a fan of selling GBPUSD down here.
Sellers may be getting exhausted after months of lower highs and lower lows.
In other words, the pound may need to blow off some steam before we see the next leg down materialize.