GBPUSD has formed a key reversal pattern at major resistance.
Could this offer a trading opportunity on the major forex pair?
Watch the video to learn more…
Today, we’re going to take a look at GBP/USD.
Now that the Bank of England stuff is out of the way, the GB Pound can now be an interesting chart to look at. This is because we retested the supply zone at 141 up until 141.35. We rejected it, then we pulled back from the mini uptrend because the market is making higher highs and higher lows.
With that being said, I’m expecting this market to continue the uptrend at a key support and resistance level. I’m looking for the price to pull back down to the 139 level either for a continuation or a reversal.
The GBP/USD daily timeframe shows the price uptrending. It hit a key supply zone at 1.4000. If the market follows the trend, then we could see a retracement move down to the 1.3900 support. This could offer us some short opportunities.
We have a reversal going on at the moment, which is why I’ve been looking at different trading opportunities.
In the four-hour timeframe, the first thing you’re going to see is a Head and Shoulders pattern. This is a common pattern that we see at the tops of trends of key resistance/support levels.
The price broke down. We had a clean close below these lows, suggesting that if the price were to pull back higher, then we could see a continuation of the downtrend.
We’re going to identify the level within this area first. The first level I like is 1.4128, which is the most traded level within this previous consolidation pattern.
But the four-hour is looking good for some potential downsides. The 1.4128 or 141 level is the neckline of the Head and Shoulders pattern. If the price comes back here, then we could look to get short on this market.
On the four-hour timeframe, the price formed a Head and Shoulders pattern. These patterns occur at the tops of trends and key resistance/supply zones. This could offer us a short opportunity if the price was to retest the neckline level.
Alternatively, there’s a day trading option, but we have to be careful because there’s a little bit of demand. There is demand because we had a short break in the market, and extreme bullishness followed.
On the 30-minute timeframe, the market consolidated. Now, the most traded level within that consolidation is 1.4062. So, I’ll be looking for the price to go back up to that level.
I’ll be going on the 5 or15-minute timeframe because I’m going to try and identify the change of the momentum.
Alternatively, we could see an opportunity for a day trade on GBP/USD. The market recently broke out of the 30-minute consolidation. This shows a high-volume trading level at 1.4062. If that gets retested, then we could see sellers re-enter the market.
If we see that, then I’m going to look for short-term short opportunities down to the demand zone.
So, we’ve got the overall Head and shoulders pattern where we can look for opportunities. And we also have the day trading move, where I’m going to look for a 5-minute opportunity at 1.4062.