GBPUSD: A Tempting Resistance??

Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.

 

Gbpusd has been able to maintain the bullish momentum that resulted from a test of, and bounce off its daily support line at the 1.6070 area. This momentum pushed it to 1.6328,  thereby exceeding the previous weekly high at 1.6299. Of importance is the fact that the weekly trendline is being tested at current level (1.6300…see chart below). This resistance can, in no way be considered minor, however, I am extremely reluctant to consider shorts in spite of the resistance. I favour buying on dips for the following reasons: A major reason that prompted many traders to look for shorts on this pair is the fact that there was a head and shoulders pattern on the weekly chart. This pattern, in my opinion, got violated when price closed above what could have been the right shoulder area (1.5990…marked by red horizontal line) Secondly, and perhaps more importantly, the price action has not in any way suggested a reversal from bullish to bearish, as each test of the daily up trendline saw it bouncing back strongly.

If we were to see a pullback from this level, the most immediate support would be the up-sloping trendline at 1.6100s on the 4hr timeframe. Further down, is the broken right shoulder resistance at 1.5990s. These are the levels I am watching for buying opportunities. Further to the north, a conclusive breach of the trendline needs to be confirmed by a weekly close above it. From there 1.6550/6600 represents a significant band of resistance. Perhaps this level will present shorting opportunities.

Thanks for having taken the time to read the article. I would love to hear your views as well. Successful trading in March!

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  • Geoff

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