GBPUSD → Will We Reject Here!? A Potential Drop to 1.21!

GBPUSD has made contact with the resistance zone, as predicted from last week's analysis. We're now faced with a decision to short or wait on the sidelines for more price action.

How do we trade this? 🤔
It is not reasonable to short just yet because we do not have a sell signal! We're currently at the resistance level but without a confirmation of rejection, there is no justification to short without imposing too much risk. Enter after another sell signal, then 1:2 risk ratio down to the bottom of the trading range around 1.22000.

If the price breaks resistance, wait for it to confirm support on the resistance zone then look for a long entry off of a bull signal and confirmation bar.


💡 Trade Idea 💡

Short Entry: 1.26670
🟥 Stop Loss: 1.29000
✅ Take Profit: 1.22000
⚖️ Risk/Reward Ratio: 1:2


🔑 Key Takeaways 🔑

1. Trading Range after Bull Run, Bias to Long.
2. Price Currently at Resistance Zone, Look for a Reversal Signal.
3. If Shorting, Watch the 200EMA for Support.
4. If Break Resistance, wait for New Support Confirmation.
5. RSI near 70.00, Bias to Short.


⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!


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Comment:

So far so good for the short setup! This Daily candle needs to close on or near its low to justify a short. One more bear candle to confirm would be optimal probability. More updates as developments form!

Comment:

Double top on the 4HR Chart, two Daily candles closing near their lows below resistance. The short position is now justified. Aim for a protective stop just above the resistance zone at a 1:2 Risk/Reward toward the bottom of the channel. Keep an eye on the 30 and 200 EMA ribbons for support.

Remember, this is a trading range after a bull channel, so the bias ought to be bullish. It's reasonable to scalp half the position of the short at 1:1 Risk/Reward and take the remainder of profits toward the bottom of the channel or when a reversal bar to the upside appears.

More updates to come as they unfold!