Today I’m going to show you exactly how I’m trading GBPUSD this week.
Check out the GBPUSD video below and scroll down for the annotated charts and analysis.
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I’ve written about the GBPUSD breakout above 1.2740 a few times this week, including Tuesday’s video analysis.
If you watched recent videos, you know I’m more interested in shorting a failed breakout than longing GBPUSD at support.
So far today, the pound is showing weakness and trading below 1.2720/40.
However, given the significance of this support area, it will take a convincing daily and weekly close below to confirm the fakeout.
By convincing, I mean a daily close well below 1.2720.
Anything below 1.2700 should get the job done.
If it sets up, I’ll watch for a GBPUSD short early next week on a retest of 1.2720/40 as resistance.
A fakeout of an area as significant as 1.2740 would likely send GBPUSD toward the October trend line at 1.2550 and potentially lower.
Targets like 1.2300 and 1.1840 are possible if the fakeout sets up.
The US Dollar Index (DXY) will play a critical role in this trade idea.
Primarily, whether dollar bulls can force a bullish breakout from the September trend line.
Watch the video above for all of the details.
So a convincing close below 1.2720 today would establish the short setup for next week with targets of 1.2550, 1.2300, and possibly 1.1840.
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