Has GBPUSD broken out of its consolidation, or is price still capped by resistance? I switch to a line chart, and kick it up a timeframe to decide:
The weekly line chart suggests that the upside breakout has happened. Now we wait for a retest on the daily, or 4-hour timeframe, to target 1.42, nearly 400 pips higher.
The weekly Loonie shows a significant breakout above the 1.2900 level, potentially opening the way up to significantly more upside. I am interested in a retest of 1.2900 from above now, confirming the level as support before I target longs.
However, a valued member of our community pointed out a significant macro-structure on this pair last week:
Price is about to hit dynamic resistance that has been in play since late-2015. Therefore, any long attempt on a bounce at 1.2900 will have to take into account this larger structure for profit targets. Should price actively reject the upper trendline shown above, my choice would be to switch to short opportunities.
Interestingly, as Monday gets underway we see price drift higher, a move that I think will reverse.
Is the Kiwi ready to break down lower? Price could not manage to run up to 0.7400 for a third attempt to break higher and finds itself back down at 0.7200. The 0.7200 zone represents an essential level of resistance for the pair and suggests a move lower (USD strength) is on the cards.
We will only have a confirmed short when/if price breaks and closes below 0.7200 and offers anattempt at retesting that level from below.
The GBPAUD printed one of my favourite tradable patterns last week. We see the longer term trend (up) being capped by a horizontal zone of resistance, and then POP, price breaks higher and clear out all the stops of those banking on a reversal.
Just a little more patience required here – wait for the retest from above and bounce, opening the way to 1.8400.