ICmarkets

GBP/USD A break of the round number 1.71000 is likely to be seen

FX:GBPUSD   British Pound/U.S. Dollar
35 0 0
4hr TF.

The higher picture resembles the following:

• Buyers are still seen deep within weekly supply territory at 1.76297-1.67702, with a little interest being shown by the sellers at the moment.

• The daily timeframe still shows consolidating price action in no man’s land between daily supply above at 1.76297-1.73024 and daily S/R flip level seen below at 1.69712.

Technically, price has not changed much since the last analysis. We still favor a drop below the round number 1.71000 into the 4hr S/R flip area at 1.70617-1.70459. There are possibly countless traders awaiting there both attempting to fade the level and sell the breakout, and pro money knows this! So, a drop lower below the aforementioned round number level will stop out the majority of the traders going long, but also trigger in the breakout sellers who will likely think they have hit a good trade. However, if they trade only using the lower timeframes, and ignore the higher timeframes, in our opinion they are driving blind because all they’ve done is sold into a 4hr S/R flip area (levels above). Once pro money reaches this area they will likely have enough buy orders in the market as they were no doubt buying up all those sell orders (Stops from the traders who were buying at the round number and breakout sellers’ orders) on offer. By rebounding price from here they will stop out the original breakout sellers forcing them to cover their positions likely adding more fuel to the rally higher (breakout sellers covering their positions will turn their stops into buy orders).

Taking all of the above into consideration we still favor (as mentioned above) a drop lower into the 4hr S/R flip area at 1.70617-1.70459, and a nice bullish reaction is expected to be seen from there.

Pending/P.A confirmation orders:

• Pending buy orders (Green line) are seen just above demand (1.70617-1.70459) at 1.70662. The reason a pending buy order has been set here is because the buyers have now proved this area by consuming sellers around multiple highs above possibly clearing the path north up to the round number 1.72000. A drop down to the 4hr S/R flip area at 1.70617-1.70459 is expected soon to gather liquidity, which should in turn fill the aforementioned pending buy order in the process.
• No P.A confirmation buy orders (Red line) are seen in the current market environment.

• No pending sell orders (Green line) are seen in the current market environment.
• P.A confirmation sell orders (Red line) are seen just below the round number 1.72000 at 1.71943. We have placed a P.A confirmation sell order here simply because these psychological levels are prone to deep tests/spikes, so sometimes it is better to wait for that all important confirmation.

• Areas to watch for buy orders: P.O: 1.70622 (SL: 1.70423 TP: Dependent on price approach) P.A.C: No P.A confirmation buy orders are seen in the current market environment.

• Areas to watch for sell orders: P.O: No pending sell orders are seen in the current market environment. P.A.C: 1.71943 (SL: Dependent on price action after the level has been confirmed TP: Dependent on approaching price action after the level has been confirmed).

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