GBP/USD Price Analysis: Upside extension to liquidity, now in play

  • GBP crosses are setting up for a bullish extension.
  • Cable is on the verge of a break of structure and bulls will be seeking a discount n the way to the 1.3430s.

It is one or the other until breakeven can be achieved, but just like the following GBP/JPY analysis, cable bulls are in for an opportunity on the next bullish close.

The following is an analysis of the daily and 4-hour chart which shows that the price is in the throes of the next bullish extension as the correction of the prior bullish impulse meets support. 

Daily chart

As tight as it is until the next liquidity wick and resistance, there is still the prospect of a 1:3 risk to reward opportunity according to the following analysis:

Firstly, the market is bullish and in a swing trading scenario, we want to trade in the direction of the trend having already capitalised on the prior bullish impulse.

However, it is always wise to recognise when a trend could be maturing.

The current trend is not guaranteed to print a new swing high beyond the liquidity wick's high of 1.3482. Therefore, it is prudent to apply less risk towards this liquidity/resistance.

With that said, traders trade what opportunities they see and the price action has all of the makings for a high probability long/buy set-up.

Since the last bearish candle's lows on the 19th Nov, the price has made a 50% mean reversion from the highs in a correction of this bullish impulse. 

The correction is significant enough to look for an opportunity to get back involved with the trending market.

The 4-hour time frame is suitable for identifying the market structure and technical environment for a long position:

4-hour chart


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

GBP/USD retreats from new highs amid dollar strength

GBP/USD has fallen off the peak of 1.3719, the highest since 2018, amid fresh dollar strength. Optimism about the UK's vaccine campaign and lower cases boosted sterling earlier. The greenback awaiting Biden's first moves as President. 


EUR/USD falls toward 1.21 ahead of Biden´s inauguration

EUR/USD has been descending toward 1.21. President-elect Biden is inaugurated later in the day and hopes of stimulus are high after Treasury Secretary nominee Yellen's testimony. 


Gold: Bulls recapture 200-DMA ahead of Biden's inauguration

Gold prices are attempting to correct higher above 200-DMA. The metal cheers rising US inflation expectations amid hopes of a massive stimulus package under the incoming Biden administration. 

Gold news

Bank of Canada Rate Decision Preview: No change anticipated in interest rate

The Bank of Canada is widely expected to keep monetary policy and quantitative easing unchanged at its meeting on Wednesday in spite of new COVID-19 provincial lockdowns and a slowing economy.

Read more

US Dollar Index: Upside target remains at 91.00

DXY met buyers in the 90.30 region earlier on Wednesday and now resumes the upside to the 90.50/55 band.

US Dollar Index News