On the daily GBPUSD chart below, we can
see that the price has finally reached the top of the range at the 1.24 handle.
This will be a key level for both buyers and sellers. The buyers will need to
break above the level with conviction to keep the rally going.
The sellers are likely to start
piling in here to target a fall towards the bottom of the range at 1.1839 and
beyond. Beware that if this was just a squeeze on dollar longs, the following
rally in the US Dollar will be aggressive.
On the 4 hour chart below, we can
see that we have a rising
wedge right at the top of the range. This is a reversal pattern and we can
also see that we have a big and long divergence with the MACD. The setup for the sellers looks
incredibly good now.
Generally, the target would be
the bottom of the pattern, which in this case comes at the 1.20 handle. So, the
sellers have a really high reward to risk ratio here. The buyers, on the other
hand, will need to break above the upper trendline and the top of the range to
invalidate the selling setup and extend the rally.
On the 1 hour chart below, we can
see that the buyers may lean on the 61.8% Fibonacci
retracement level and the trendline before trying to break
above the top of the range. The sellers will want to wait for a break below the
trendline before piling in and extend the fall.