GBPUSD price is currently on the downtrend channel resistance where we have a few signals that are pointing for an upside breakout.
Since the middle of December, the price has been rising in value and there was no strong resistance that created pressure on the price. The price was reaching new highs almost every day which is visible by the bullish candles.
There were a few small bearish candles, but their formation does not suggest the weakness of GBP/USD strength.
When the price reached stronger resistance at $1.35815 the price retraced and formed a bullish pin bar.
After that, the price continued to move again close to resistance where it yesterday formed another bullish Pin bar.
With a few bullish Pin bars and market sentiment clearly bullish we can expect pressure on the current resistance level at $1.35815.
The resistance level did not prevent the price from moving higher, but it has presented support for the price when falling down. So, in this bullish scenario, we can expect the price to have less pressure of keeping below this resistance level.
Even this level is a confluence of resistance we can expect the price to break above. It could be that the breakout is short-lasting, but we will see what happens in the next few days.
We can expect the price break above the current resistance and continue moving to the next resistance at $1.36858. This level is a stronger resistance which will hold the price from moving higher.
Entry-level would be on the retrace at $1.35815 after breaking above $1.35815. When the price retraces back to this level after the breakout we should look for the bullish price action that will confirm the current resistance level as the next support level.
The confirmation could be as a bullish Pin bar or a bullish engulfing bar.
Stop loss would be at $1.35200 which is below the current bullish Pin bar. If the price closes below this level that will mean the price is back in the downtrend channel and it will continue moving down.
The target level is at $1.36858 which is the first resistance level. The second target level is at $1.38038 which is the tipping point for the price. If the price closes above this level the market will change the bias into bullish.
Frano is an engineer, author, forex trader and the owner of a blog where he teaches forex courses for beginners. Frano created a website on how to trade forex to share his knowledge, market analysis which is also published on forexFactory.com, investing.com and many other trading related websites.