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 Chart of the Week: GBP/JPY bulls expecting upside extension

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