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GBPUSD Rejected by Confluence of Resistance at 1.3300

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

Yesterday I pointed out a confluence of resistance at 1.3300/20 on the GBPUSD. It’s the intersection of a key horizontal level and descending channel resistance from the May highs.

It didn’t take long for sellers to make their stand. We’re less than 24 hours into the new trading week, and already the pound has slipped by more than 100 pips from today’s session high.

However, despite the selloff from the 1.3300/20 area, the GBPUSD remains a somewhat tricky pair to trade.

The reason for that is due to the descending channel (which I refer to as a downward sloping flag). A descending formation such as this after a strong downtrend can often signal a correction higher.

So, while it is true that the GBPUSD is selling off from a resistance level we were aware of per yesterday’s forecast, the price action since May is tilted in favor of buyers.

With that in mind, I’ll continue to remain on the sideline for now. There is a short-term trend line from the June 28 low that if broken could present a short opportunity. Such a break could send the pair back to the 1.3050 support level.

As I mentioned on Sunday, it’s going to take a daily close (Remember, I use New York close charts which you can get here) above the 1.3300/20 area to trigger a meaningful correction. Until that time, the GBPUSD will remain vulnerable.

Update: If today’s session closes near current levels (1.3200), the bearish engulfing pattern will likely attract additional selling pressure throughout the week.

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GBPUSD descending channel

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7 comments
Tunde Ajibola says

very insightful I could see the same thing. Thanks for your usual support to newbies like me

Reply
    mike says

    I’ve been watching the cable {GBP/USD} since May 29th, 2018. As long as it is below the 200-day moving average overcoming the gravitational pull would require a Catalyst.
    Until then I’m bullish on cable coming back up sooner or later. Since I’m a Swing Trader I’ll stay in the trade through the up and down movements of the pair. I don’t see why I could not make 250 pips before closing my trade.
    it’s Summer time now with traders probably “Selling in May and going Away”. As soon as the animal spirit returns to the market my exit point would be triggered and my cable trade would close.

    Reply
Andrew says

The “confluence of resistance” had anything to do with today’s move down. Pure coincidence.
The move had all to do with the resignations of Davis and Jonson and the Brexit turmoil.

Reply
    Justin Bennett says

    I can point out dozens of scenarios every month just like this one where fundamentals and technicals collide. The two are NOT mutually exclusive.

    Reply
      jerry says

      Justin, hello! My confluence was with the ascending channel clearly seen in H4, I placed buy order when the market plummeted to the trending resistance. What confluence of a channel can I rely best on? Higher time frames ?

      Reply
      Andrew says

      Yes it often happens. The point is though that sometimes the news supports the technical, while at other times it negates the technical prediction. News of course is random, and unfortunately it always trumps the technical.
      I am intrigued by the current GU price. Would have thought that the combination of technical, bad economic data and the Brexit resignations would have sent the GU a lot lower by now. But it is stubbornly holding on.

      Reply
Brad says

Actually you should watch the news, Justin. Theresa May is in trouble over her handling of Brexit. If she has to step down, Pound could fall ever further.

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