GBP/USD Analysis H1 Timeframe January 28, 2026 
Analysis of Market Structure and Liquidity The provided hourly chart for GBP/USD, dated January 28, 2026, reveals a clear and pronounced bearish market structure following a significant breakdown. The price action shows a decisive break below a previous consolidation zone or swing low around the 1.37000 level, confirming a shift in momentum from the buyers to the sellers. This breakdown established a new lower low, solidifying the downtrend. The subsequent price movement is characterized by a series of lower highs and lower lows, with the most recent low touching approximately 1.34918. The price is currently consolidating in a narrow range near these lows, indicating a potential pause before the next directional move. Liquidity in this context is likely concentrated below the recent lows, as stops for remaining long positions would be clustered there, and above the recent lower highs, where stops for new short positions might reside. The market’s objective is to sweep these liquidity pools to facilitate continued movement.
Identifying Order Blocks and Points of Interest A key order block, marked as "BOS" (Break of Structure) on the chart, is visible around the 1.37962-1.37000 region. This zone represents the last significant bullish consolidation before the structure broke. In a downtrend, such prior bullish order blocks become optimal resistance areas for price retracements, offering high-probability sell-side entry opportunities. Another critical area is the "IDM" (likely denoting an Institutional Demand or Supply Zone) around 1.36000, which initially provided temporary support before ultimately failing. This failed support now acts as a resistance zone. The most immediate point of interest is the current consolidation just above the 1.34918 low. This zone is a bearish order block from the last leg down and represents the immediate supply area. A retracement into the 1.36000 (failed support) or the 1.37000-1.37962 (BOS) zones would be primary areas of interest for sell setups, as they align with the established downtrend and represent institutional selling zones.
High Probability Trade Setup The highest probability trade setup aligns with the prevailing bearish trend. The ideal scenario involves waiting for a bullish retracement or pullback into a key resistance zone to offer a favorable risk-reward entry for a short position. The primary confluence zone for a sell entry is between 1.36000 and 1.37000. This area combines the failed support (IDM) and the lower boundary of the breakdown (BOS) zone. An entry on a bearish rejection candlestick pattern (such as a pin bar, bearish engulfing, or a simple rejection of the zone) in this area would be optimal. The stop loss would be placed above the recent lower high or above the 1.37962 level, depending on the precise entry, to protect against a structural break to the upside. The initial profit target would be the recent swing low at 1.34918, with an extension target towards any lower time frame liquidity or Fibonacci extension levels below that. The risk-reward ratio for this setup would be favorable, as the stop is well-defined and the profit target is a tested level.
Risk Management and Conclusion In executing this setup, strict risk management is paramount. Position size must be calculated so that a loss does not exceed a small percentage of the trading capital. The 1.34918 level is a critical juncture; a decisive break and close below it could accelerate the downtrend, prompting a move of the stop loss to breakeven and targeting further lows. Conversely, if the price rejects the proposed sell zone with weak momentum or shows signs of a bullish reversal pattern, the setup should be abandoned. The current market structure is unequivocally bearish, and trading in the direction of the trend offers the highest statistical edge. Therefore, patiently waiting for price to retrace into a confirmed supply zone—rather than chasing the market down provides a disciplined, high-probability approach to capitalizing on the established downward trajectory of GBP/USD.
