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GBP/USD Pending Breakout

GBP/USD Pending Breakout

Walker England, Forex Trading Instructor

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Market Condition: GBP/USD Pending Breakout

Target 1: 1X RangeBullish 1.2656Bearish 1.1804

Target 2: 2x RangeBullish 1.2940Bearish 1.1520

Invalidation: Continued GBP/USD Consolidation; False Breakout

GBPUSD Price Daily Chart

(Created using Tradingview Charts)

The GBP/USD has failed to make a significant high or low for the last seven sessions, allowing traders to plan for an inside bar breakout. When using the October 11 daily candle as a reference, current support for the pair is found at 1.2088 and resistance at 1.2372. Knowing this, traders may plan for a breakout either below or above these values respectfully. The distance between support and resistance measures 284 pips and this value may be used to extrapolate initial breakout targets.

This includes bearish targets near1.1804 and bullish targets near 1.2656.

In the event of a false breakout, traders may consider using half the distance of the range to create an initial 1:2 Risk/Reward ratio. Traders should also remember that the GBP/USD might maintain its current trading range. In this scenario, traders may elect to leave pending entry orders for a breakout, or trade the developing range in prices.

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

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