GBP/USD Price Analysis: Bears lurking at weekly and daily resistances
|- GBP/USD is embarking on a correction towards a 38.2% Fibonacci of the September bearish impulse.
- This gives rise to a downside extension in a 1,2,3 setup.
The market is a potential fade on rallies and from a top-down analysis, a potential sell limit setup is illustrated in the following flow of charts
Monthly chart
Starting with the monthly chart, we can see that the price has been rejected at a strong area of supply and the market is in a phase of distribution.
The monthly wick has reached a soft level of demand and is most probably going to be filled in by the subsequent supply on the lower time frames.
Weekly chart
The weekly chart shows the correction that is just getting underway for which a 38.2% Fibonacci retracement could well be an area from where the next downside impulse and a continuation of the monthly supply kick back into gear.
The end result would equate to a 1,2 and 3-wave sequence, the third being the extension of the monthly supply.
Daily chart
The daily chart complicates the target zone somewhat with there being two structures; the green candle and then the 38.2% Fib.
Nevertheless, the trade setup with the highest probability will be found on the 4HR time frame once either of these levels are reached.
As soon as either level begin to reject the price, that is when the bears will be able to look for a high probability setup as follows:
4HR chart
4HR trade set up
Further reading: EUR/GBP bearish correction paves way for higher highs
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