GBPUSD - bulls need to hold 1.2700...and if they don't...
I haven't found Cable particularly interesting to trade over recent weeks.
Intraday whipsaw movements largely as a result of Brexit negotiations have kept me away.
It's one of my favourite pairs though, so I decided to take a step back this morning and have a peek at the bigger picture.
And I think that bigger picture resolves itself quite nicely on the weekly timeframe and brings the 1.2700 level into focus.
A few important things to note.
1. The 1.2700 level has played an important role in the past. We saw price repeatedly test it from below in late 2017 and early 2018, before finally breaking through, and still politely coming back to test it from above (shown by blue shaded boxes).
2. The first touch in more recent interaction with 1.2700 came in mid-August 2018. Followed by another in late October, another mid-November and here we are again, a handful of pips away from 1.2700.
Price is doing two things then - its testing 1.2700 more and more frequently and it's also making lower highs every time it bounces off that level.
If I was a GBP bull and needed 1.2700 to hold, I would be worried. Therefore:
Trade idea: I would like to see a close below 1.2700 on the daily chart (at the very least), to confirm my bearish status. Then all I need is a bearish pattern to form, like an upward sloping channel, or maybe even a pin-bar rejecting 1.2700 from below, on a lower timeframe and I'm a seller. Will update or post a new chart if/when this happens.
What I really like about this trade is that I see no reason not to hold all the way down to 1.21500, some 550 pips lower.
Intraday whipsaw movements largely as a result of Brexit negotiations have kept me away.
It's one of my favourite pairs though, so I decided to take a step back this morning and have a peek at the bigger picture.
And I think that bigger picture resolves itself quite nicely on the weekly timeframe and brings the 1.2700 level into focus.
A few important things to note.
1. The 1.2700 level has played an important role in the past. We saw price repeatedly test it from below in late 2017 and early 2018, before finally breaking through, and still politely coming back to test it from above (shown by blue shaded boxes).
2. The first touch in more recent interaction with 1.2700 came in mid-August 2018. Followed by another in late October, another mid-November and here we are again, a handful of pips away from 1.2700.
Price is doing two things then - its testing 1.2700 more and more frequently and it's also making lower highs every time it bounces off that level.
If I was a GBP bull and needed 1.2700 to hold, I would be worried. Therefore:
Trade idea: I would like to see a close below 1.2700 on the daily chart (at the very least), to confirm my bearish status. Then all I need is a bearish pattern to form, like an upward sloping channel, or maybe even a pin-bar rejecting 1.2700 from below, on a lower timeframe and I'm a seller. Will update or post a new chart if/when this happens.
What I really like about this trade is that I see no reason not to hold all the way down to 1.21500, some 550 pips lower.