GBP/USD seems to be hitting a wall
I have been monitoring the GBP/USD 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 GBP/USD:
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 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.