GBP/USD Price Analysis: Short setup stars alligned for POC/ 61.8% confluence target to 1.3203/20
|This was a developing story
- GBP/USD stars are aligning for a bearish playbook, although the price action has not confirmed, so far.
- The price is below critical levels of resistance and POC.
Besides the recent comeback in the greenback and dovish rhetoric from the Bank fo England, the technical confluence is aligning for GBP/USD from which bears may wish to consider for a shorting playbook.
Daily chart
The past week's volume point of control has a confluence with both the prior resistance as well as a 61.8% Fibonacci retracement of the recent bullish impulse.
This confluence offers a deep target on another break below 1.3305. 1.3283 has already been printed which has likely cleared out the buyers.
Meanwhile, with the price below the most recent point of control, the sellers are in control and the retest of the 4-hour resistance adds to the bearish bias.
4HR chart
Hourly chart
In the meantime, there are three targets on display:
1. The first is derived from a day trade perspective, more to come below, monitored and managed from a 15-min time frame for a 1:3 risk to reward ratio.
2. The second is derived from the downside structure, 27th Aug highs, for a swing trading opportunity.
3. The third is derived from the Volume Point of Control for the week commencing 24th August.
15-min chart day trade setup
Monitoring the price action from a 15-min perspective, if the price falls at the resistance and subsequently melts to below the 21 EMA, accompanied by RSI turning bearish, there will be prospects for a short entry.
Bears will ideally want to see a retest of new resistance structure as an entry point for an approximate 1:3 risk to reward ration to target 1.
Update
As can be seen, the price has neem on the march and has not only broken the trendline resistance but has tested at the 78.6% Fibonacci retracement.
A close above the 78.6% would invalidate a 15-min day trade, but so far, the price has held and the reaction to the level will need to be monitored.
There is a high probability that the break of the trendline was a fake-out considering the overall bearish bias while below the POC a 1.3380.
However, a break and close above the hourly 21 EMA at 1.3350 or the 78.6% takes the set-up off the table for the immediate future.
Update
The price closed above the hourly 21 EMA and 1.3350 as well as the 78.6% which invalidates the set-up.
For a swing trade to the downside, 4HR bearish conditions need to develop first and confirm a short entry.
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