GBPUSD Nears Reversal Territory

by Justin Bennett  · 

February 5, 2020

by Justin Bennett  · 

February 5, 2020

by Justin Bennett  · 

February 5, 2020


Two days ago, I wrote about a scenario that would turn GBPUSD bearish.

The 1.2960 region is the location of ascending channel support that extends from the 2019 low.

Although the GBPUSD hasn’t closed below that level yet, the pair did take out another critical level just two days ago.

Monday’s 30 pip gap down was the first sign of weakness.

On Saturday, I mentioned how a gap down this week would indicate weakness.

That Monday selloff led to a close below trend line support that extends from the November 2019 low.

I’ve pointed out this trend line several times in recent weeks.

So far today, the GBPUSD is selling off from that area, which is now serving as resistance.

But the 1.2980 horizontal level has shown resilience.

And the bottom of the 2019 channel makes 1.2960/80 a confluence of support.

However, as I mentioned in Monday’s members-only video, a breakdown seems imminent given the way this week started.

Add the fact that GBPUSD closed below the November 2019 trend line on Monday, and the breakdown may have already started.

A daily close below that 1.2960/80 region would target 1.2770.

The “daily close” refers to 5 pm EST using the same New York close Forex charts I use.

In my opinion, that would be just the start.

I think a close below channel support near 1.2960/70 would reach 1.2570, perhaps even 1.2380.

The reason I think that has to do with the way this ascending channel outlines the latest uptrend.

Since last September, we’ve seen GBPUSD carve higher lows and higher highs.

A daily close below ascending channel support near 1.2960/70 could very well trigger the first lower low in that series.

Keep in mind too that British pound weakness bodes well for the EURGBP long idea I wrote about last Friday and again on Monday.

Note: I hold a GBPUSD short position from 1.3044.

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GBPUSD possible breakdown from support

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20  Comments

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  1. Thank you for the analysis even though it seems too much details to me. Pretty new to FX trading but getting there. I wish to ask “Can one trade a small account of $500 (or lower) successfully on a Daily (or bigger) time frame? This question is with respect to one of your post relating to why forex is so difficult. You recommended that we trade using the daily time frame. Thank you so much for you very brilliant posts.

    1. The data to use have been mentioned by Justin. Whatever trading platform you are using would take cognisnace of your entry point whether long or short. From the channel, you could see it is an downward trend even with the MA (moving averages) Curves training downards. So all you need to do is to plug in the forecasted resistance figures as your Stop Loss and your support values 1.2770 & 1.2570 as your take profits TP1 & TP2 respectively.

  2. Hi Justin, thank you for your efforts and analysis.
    Can you see the head and shoulders pattern on the USDCHF pair that it is about to break out

  3. Im’ a member for over 2 months now and very happy with all the education and update analysis you send to your members.

    cheers

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