GBPUSD has been sideways since November, but this week’s price action could offer an opportunity.
In today’s video, I discuss what GBPUSD needs to do to confirm a potential trade setup.
I also provide an update on the US Dollar Index (DXY).
Watch the video below and scroll down for the annotated charts and analysis.
GBPUSD has been stuck between 1.2550 and 1.2800 since November 24th.
The lack of momentum has made the pound a challenging currency to trade, especially with the recent holiday market conditions.
However, this week’s price action is starting to show some potential.
Despite the fact that GBPUSD is still locked in this range, the pair recently broke its November 1st trend line.
Earlier today, the pound tested the level as new resistance while sweeping Wednesday’s high.
A bearish rejection candle today could make things interesting, especially if the DXY can clear 102.60 resistance in the next few days.
That said, we’re still dealing with relatively illiquid conditions from the recent holidays, so caution is needed.
Key support for GBPUSD comes in at 1.2550 with a daily close below that exposing 1.2385.
Alternatively, a daily close back above the November trend line would negate the opportunity discussed above.
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