GBPUSD – Daily Timeframe Analysis: Head & Shoulders Pattern

29 Jul

The GBPUSD daily chart is currently presenting a textbook Head & Shoulders reversal pattern, a powerful bearish signal that often marks the end of an uptrend and the beginning of a new downward cycle. This setup demands attention from swing and positional traders alike, especially considering the size and clarity of the structure.

🔍 Pattern Breakdown

• Left Shoulder: Formed in late May, establishing a significant high before a corrective move.
  
• Head: A higher peak was made in early June, which now stands as the pattern's highest point.
  
• Right Shoulder: A lower high formed in mid-July, indicating weakening bullish momentum.
  

Neckline: The crucial horizontal support zone around 1.3330–1.3340 was tested multiple times and has now been decisively broken, triggering a confirmed bearish setup.

📊 Technical Significance

• This Head & Shoulders pattern becomes especially meaningful due to:
  
• Multiple rejections at the neckline, confirming its strength as support-turned-resistance.
  
• Bearish volume expansion on the breakdown, adding weight to the selling pressure.
  
• Formation on a daily timeframe, suggesting a long-term trend reversal rather than a short-term pullback.

📌 Trading Strategy for Traders
✅ Sell Setup (Short Position)
Entry: Around the neckline zone on retest (1.3320–1.3340)
Stop Loss: Above the right shoulder (~1.3550)
Targets:
🎯 Target 1: 1.3100 (psychological and horizontal support)
🎯 Target 2: 1.2900 (measured move from head to neckline)
🎯 Target 3: 1.2650–1.2600 (extended downside zone based on structure)

⚠️ Risk Management Tips:

• Don’t chase the breakdown — wait for a pullback/retest of the neckline to get a better risk/reward entry.
  
• Ensure position sizing is appropriate based on the stop loss distance.
  
• If price reclaims the neckline with strong bullish momentum and closes above 1.3350, exit short and reevaluate.
  

🧠 What Traders Should Keep in Mind

• Macro Fundamentals: Watch upcoming economic events like BoE rate decisions, US NFP, and inflation data, which can cause volatility and impact the technical scenario.
  
• Dollar Index (DXY) trend should also be monitored closely. If DXY rallies, GBPUSD breakdown can accelerate.
  
• Trendline Confirmation: Align this with any break of rising trendlines drawn from previous lows.
  

📌 Final Thought
This pattern marks a crucial turning point in GBPUSD. The momentum has clearly shifted from buyers to sellers, and the breakdown opens up significant downside room. As a swing or position trader, this is a high-probability setup with a clear invalidation point (above the right shoulder) and a favorable risk-reward ratio.

📉 Patience and precision are key here. Let price come to you at the neckline, confirm rejection, and then take the trade with confidence.

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Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
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31 Jul

Dagangan aktif

Ready to re-test breakout level lets watch.

31 Jul

Nota

Still Holding Bearish Structure