I am looking at the GBPUSD chart now and I clearly see that the price action confirms what I meant yesterday, because I observe that the market failed to secure a confident breakout above the 1.3430 resistance area and instead formed what I interpret as a classic false breakout, which in my view signals exhaustion of buyers at these levels and suggests that bullish momentum was not strong enough to sustain continuation at that moment. I also note that this failure above 1.3430 does not automatically cancel the broader bearish idea I am considering, because I understand that the market often needs more than one attempt to break important levels, and I believe that what the price could not achieve yesterday may very well be attempted and achieved today under more favorable liquidity and volatility conditions. I am paying close attention to the context in which this setup is forming, because I see that the British pound is already trading near relatively low intraday and short-term levels, and I personally have no desire to chase sell positions at these prices, as I consider selling weakness without confirmation to be a low-quality decision that exposes me to unnecessary risk. I therefore prefer to wait patiently for the market to show me renewed intent, and I am outlining a specific scenario in which I would be comfortable participating in a continued decline, which is based on a renewed test and break of last week’s lows followed by a corrective pullback. I am proposing an entry around the 1.3435 level, but only after I clearly see that last week’s lows have been broken decisively, because I believe such a move would confirm that sellers have regained control and that the false breakout above 1.3430 was indeed a distribution move rather than a pause before continuation. I am considering the use of a limit order in this zone because I expect that after the lows are taken out, the market may return to retest the broken structure, and I want to position myself at a more favorable price rather than entering on impulsive momentum, which often leads to poor risk-to-reward conditions. I am also factoring in the psychological nature of the 1.3430–1.3450 area, because I see it as a zone where trapped buyers from the false breakout may look to exit their positions, adding additional selling pressure if the price revisits this region from below. I am aware that this approach requires patience and discipline, but I believe that waiting for confirmation and entering on a pullback aligns better with my trading logic, as it allows me to define risk more clearly and participate in a move that has already demonstrated its directional bias rather than guessing at a reversal.
I am looking at yesterday’s daily candlestick and I note that it closed bullish with only a small upper shadow, which tells me that buyers were present but did not manage to push the price aggressively higher by the end of the session, and this nuance makes me cautious about assuming strong bullish continuation from this structure alone. I see that the current price around 1.3433 is sitting in a technically sensitive zone, and I am focusing more on the intraday picture, because I believe the hourly chart is currently giving clearer guidance than the daily chart for near-term direction. I am observing that sell targets have been formed on the H1 timeframe, and I personally consider Fibonacci extensions to be relevant in this context, because I see that the market previously respected similar projection levels during corrective and impulsive phases. I am paying particular attention to the first target at the 161.8 Fibonacci level near 1.3389, because I see this level as a logical initial objective where partial profit-taking or a short-term pause could occur. I am also looking at the second target at the 261.8 Fibonacci level around 1.3345, and I believe this area has a higher probability of attracting stronger buying interest, since it coincides with prior intraday reactions and could act as a temporary support zone. I am especially interested in the third and most ambitious target at the 423.6 Fibonacci level near 1.3268, because I consider it realistic within a broader bearish scenario, even though I clearly understand that reaching such a level would require time, sustained selling pressure, and likely several corrective pullbacks along the way. I am not expecting these targets to be achieved quickly or within a single week, because I know from experience that markets rarely move in straight lines, and I anticipate periods of consolidation and retracement as liquidity is rebuilt. I am also factoring in today’s economic calendar, because I see that important news from both the UK and the US is scheduled for the evening, and I expect this news to inject additional volatility that could either accelerate movement toward these targets or temporarily disrupt the technical structure. I am therefore mentally preparing for sharp spikes, false moves, and stop-hunting behavior around key levels, which is why I am emphasizing confirmation rather than anticipation in my analysis. I am making it clear to myself that only a confident break and consolidation above the 1.3461 resistance level would invalidate the current sell targets, because I see this level as a structural boundary where bearish expectations would be compromised. I am aware that if 1.3461 is broken, sellers would likely lose control, and I would then shift my focus toward potential buy targets rather than stubbornly holding onto a bearish bias. I am maintaining a flexible mindset, because I believe that adapting to price behavior is more important than defending a forecast, and I am letting the market show me whether the projected Fibonacci targets will indeed be respected over time.
