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GBP/USD Consolidates to End Week

GBP/USD Consolidates to End Week

Walker England, Forex Trading Instructor

Market Condition: GBP/USD Pending Daily Breakout

Target 1: 1X Reference 373 Pips

Target 2: 2x Reference 746 Pips

Invalidation: Continued Consolidation

GBP/USD Daily Chart

(Created using Marketscope 2.0 Charts)

Last week we discussed the emergence of an inside bar on the daily GBP/JPY chart. Today, the GBP/USD is set to close the week with a similar candle pattern. Using Thursdays’ daily high as a reference, resistance for GBP/USD may be found at a price of 1.3476. Support may be found using the reference low at a price of 1.3103. Traders may continue to monitor these values for a potential breakout starting with next week’s open.

Traders should note that Thursday’s reference bar measures 373 pips. Traders may use a 1X extension of this bar to find initial profit targets for either bullish or bearish breakouts. Half of this range, 186.5 pips, may be used to create a 1:2 Risk/Reward ratio for an attempted breakout.

In the event that prices fail to breakout, traders may elect to trade the continued consolidation between the previously mentioned values of support and resistance.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.