The GBPUSD price could be in a mid term uptrend but as price retraces it could offer short term counter trend trading opportunities.

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Daily Chart

The GBPUSD price is currently in an upward trend but in a retracement phase. This could offer us an opportunity on a lower time frame to trade counter trends. 

In these situations we often want the price to retest the breakout highs to look for an opportunity to jump on the trend if the price forms bullish price action. 

However, to get to this point the price needs to reverse in the short term offering an opportunity to short the market. 

The Head and Shoulders Pattern

As we can see from the chart the 4hr time frame is showing a common trading pattern. The head and shoulders pattern is used to spot reversals in the market and can be used in trending markets to identify when the market could turn. 

Now that the pattern is completed we can say that the daily time frame retracement phase is in full swing and we should see a retest of the daily swing highs. 

This should cause the 4hr to form lower highs and lows on its way to the support. If the price was to rally and retest the neckline of the pattern and form bearish price action, we can assume that the 4hr trend will continue to the major support level. 

This will offer us a short term trading opportunity.

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About The Author

Jonathan Kibbler

Jon Kibbler, our Senior Market Analyst, boasts over a decade of trading experience. He specializes in dissecting the intricacies of financial markets and sharing his expertise with precision. Jon’s insights have been featured at renowned events and platforms like Coindex, Forex Analytix, and Forex.com.

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