GBPUSD Seems to be Hitting a Wall

Sep 12, 4:55 pm
British flag

I have been monitoring the GBPUSD pair for quite some time now. It seems like the level it is sitting on right now is a major resistance level from the beginning of August.

Today, we have seen quite a bullish day so far. The price is located at the major level at the moment. What are the chances for a reversal?

Let’s look deeper. Below if the 4H chart of the GBPUSD:

If we zoom closer, we can see the big green candle is followed by a small-bodied candle.

This is usually a bearish price action setup. There are two potential scenarios that might happen following this bullish candle:

Scenario 1: Price retraces from the 1.3270 area down to the 1.3100 initially. It all depends on how the US sessions accepts these gains

Scenario 2: The second scenario and the least likely in my opinion is that the price will continue the uptrend. We might actually see a small retracement before we see the price going higher (if it goes higher at all).

Summing up: One way or another, there is a chance to see price going lower. From there, it might break down even lower or just continue the trend.

My course of action:

I will be monitoring closely the price action. I will be looking for either bullish or bearish confirmation.  One way or another, I will not be surprised if price makes another big move in either direction.

If Scenario 2 is the right one, then we can see the price going higher to the next resistance level. The next resistance level is located at around 1.3500.

It is only Tuesday. Therefore, I am expecting to see more action from this pair until the end of the week. Let’s wait patiently and see if we have a chance to enter in a long or short trade.

Disclaimer: This article is for informational purposes only and not for the purpose of providing investment advice.

 

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Colibri Trader has traded in two of the major Prop Trading Houses in London. He is an avid rock climber, runner and loves reading. He also loves helping other traders and his popular website colibritrader.com has recently gained a lot of recognition from the major trading websites online.

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