Daily Price Action

GBPUSD: Rising Wedge Puts 2017 Rally in Jeopardy


Since the August 3rd bearish pattern that formed at 1.3250 resistance, the GBPUSD has lost nearly 400 pips. Sellers took a breather last week just above the 1.2970 handle, but even that level gave way this past Monday.

Unless you’re looking at the price action since March, the pair seems to be hovering between 1.2770 support and 1.2970 resistance for no good reason.

But if we go back to the March 14th swing low, the bids near 1.2880 start to make sense. There’s a trend line that connects that low to the session low from June 21st – that’s what is supporting today’s prices.

GBPUSD daily wedge pattern

This is an excellent example of why I favor the daily charts that use a New York close. Even the 4-hour chart doesn’t do this trend line justice. In fact, those who attempted selling yesterday’s break on the intraday charts have most likely been stopped out by now.

Another significant observation here is that the 10 and 20 EMAs are still approximately 100 pips above the current price. The overextension increases the likelihood that we’ll see further consolidation before the next leg lower materializes.

It’s going to take a daily close below trend line support near 1.2880 to get me interested in a short position. Key resistance comes in at 1.2970 and could offer a selling opportunity if tested, but securing a favorable risk to reward from there would be difficult.

If sellers manage a daily close (5 pm EST) below this trend line, the next key support comes in at 1.2770. This area served as a pivot between April 19th and June 19th. A daily close below that would pave the way for a move toward the June low near 1.2615.

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GBPUSD daily chart

Leave a Comment:

Carol Capner says

Hello Justin.
My analysis on the daily GBPUSD is that a bullish move towards 1.18% @ 1.31091 – 1.27% @ 1.31488, then a large fall will follow.

Darius says

It is unbelievable how can this work – it looks like people only care about trendlines and not economic data 🙂 yea, I see this trendline.
Economic data should not always match the trend lines.

Looks like most of traders just look at lines and don’t give a shit about economics and thats why those supports happen 🙂 wow, just unbelievable.

I even read one article yesterday comparing to casino, like if you play roulette and get 8 reds in a row, then decide that next will be like red becuase it is trend of reds. Or next will likely be black because it has to even out to 50%. But we all know that roullette does not care about past data.

But it is interesting that forex cares about past data even few months ago. And especially those non horizontal lines look most weird.

Like horizontal line make econmical sense, if comodity fallen to X price, we all know that it is worth Y price, so it has to rice back.

But by trendline – if GBP is worth 1.288 and price closes below trendline – it should still be worth 1.288, but everybody starts to sell and it falls down to 1.277 for some non logical reason. (Asssuming there were no significant economy news).

And if there is no news, then we know taht price is still 1.288, then it reaches 1.277 and again goes back to its real price. Wow – why this is happening 🙂 Why price is not being just horizontal unless news are affecting its big moves?

MIMI says

August is always a crazy month and even though GBPUSD closed below on the Daily, I stayed out of the trade as I don’t see a weak GBP. In fact, the market pulled up from that level. Same with EUR, it’s staying strong and everyone wants to sell it! The market is way too volatile at times this month to take trades and will just empty trading accounts.

    Justin Bennett says

    Hi Mimi, this one actually set up quite nicely for us, but favoring the sideline during the summer months is never a bad idea.


Hi Justin,

What is the next move of GBPUSD?
I have taken buy at 1.30200 and it is continue going bearish, what to do? could I wait for further bullish movement or can exit from pair? please suggest.

    Justin Bennett says

    That’s up to you. For the record, I was always a bit bearish the GBPUSD, particularly after the pair closed below the trend line I illustrated in the charts above.

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