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Last week saw the start of what might be a few key reversals in the Forex market. One pair that fits that description is GBPUSD. Although the pair is starting to show signs of strength, it’s important to remember that this market has seen five consecutive losing months. Which means it has a lot to prove before any long positions should be considered.
It’s also important to remember that the coming week brings with it another dose of FOMC. As we all know, this is a market-moving event and this time around is rumored to be even more so.
That said, it is possible to come up with a plan that will help to put the odds in our favor should this pair fulfill the reversal potential. The first piece to the puzzle comes in the form of a previous descending channel on the weekly chart.
GBPUSD weekly chart
We can see in the chart above that the pair has found support at former channel resistance. Whether or not this area will hold as new support has yet to be seen.
However if we take a look at the daily chart, we can start to get a sense of what it might take to see a true reversal. The 1.5730 level has not only been acting as horizontal resistance, but it also intersects with trend line resistance from July 15th.
This leaves us with a key inflection point to keep an eye on for the coming week. Alternatively, a move lower from current levels would take us back to range support around 1.5580.
Summary: Wait for a daily close above the 1.5730 key inflection point. The next area of resistance comes in between 1.5930 and 1.5960.
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