GBP/USD Bullish Breakout Setup – Falling Wedge + Key Structure Confluence
Pair: GBP/USD
Timeframe: 1-Hour (H1)
Date: April 18, 2025
Trading Bias: Bullish (Long Setup)
🔍 Overview of Price Action
The GBP/USD chart showcases a strong technical formation: a Falling Wedge breakout, a widely recognized bullish reversal pattern, emerging after a well-defined impulsive bullish wave.
This price action follows a textbook flow:
Impulse Move Up – Strong bullish rally leading to resistance.
Corrective Phase – Price entered a wedge-shaped pullback with weakening bearish momentum.
Reversal Signal – Price broke above the wedge resistance line with strong bullish candles.
Breakout Retest Opportunity – Price is now approaching a resistance-turned-support zone, creating a potential entry for a long trade setup.
🧩 Pattern Analysis: Falling Wedge
Falling Wedges are significant because they show:
Decreasing bearish strength over time.
Bullish divergence potential (if supported by RSI/MACD, though not shown here).
A breakout above the wedge confirms buyers regaining control.
📌 Pattern Structure:
Trendlines: Both upper and lower bounds are descending, converging toward a point.
Volume (assumed): Typically fades during wedge formation and spikes on breakout.
Breakout Confirmation: Occurred after a retest of the support zone.
This wedge appeared within a broader uptrend, adding trend-following confirmation to the bullish breakout.
📊 Key Technical Zones
🔽 Support Zone: 1.32000 – 1.32100
Price previously found demand in this area.
This level acted as the base of the falling wedge, forming multiple reversal wicks.
It’s a critical area for invalidation and Stop Loss placement.
🔼 Resistance Turned Support Zone: 1.32650 – 1.32800
This level was previously a ceiling for price (multiple rejections).
Upon breakout, it becomes a retest zone — a key area to look for bullish confirmations (e.g., bullish engulfing, pin bar).
Confluence of structure and pattern breakout = high probability zone.
🎯 Target Zone (TP): 1.32959
Target is projected based on:
Height of the wedge added to the breakout point (measured move).
Previous resistance zone, acting as a magnet for price.
Psychological level around 1.33000, often tested in trending moves.
🛑 Stop Loss (SL): 1.32101
Placed slightly below the wedge’s low and the support zone.
Ensures proper invalidation if price reverses unexpectedly.
🔄 Trade Plan Summary
Setup Details
Entry Type Breakout and Retest Confirmation
Entry Zone 1.32650 – 1.32800
Stop Loss Below 1.32100
Take Profit 1.32959
Risk/Reward Approx. 2.5:1 (depending on entry)
Confirmation Bullish candle or reversal pattern on retest
🧠 Psychological & Technical Confluence
Market Sentiment: Shift from bearish correction to renewed bullish momentum.
Liquidity Grab: Price may have trapped early shorts below the wedge, fueling the breakout.
Breakout Psychology: Traders waiting on the sidelines often jump in after the retest — increasing bullish pressure.
🔁 What to Watch for Before Entry:
Bullish candle on retest of the breakout zone (1.32650–1.32800).
Failure to break above may indicate a fakeout — be cautious if price consolidates below the retest area.
News Impact: Watch for USD or GBP economic events that could cause volatility or invalidate technicals.
📘 Educational Notes (Optional Section for TradingView)
💬 Why the Falling Wedge Works:
A falling wedge shows a loss of control from sellers. Each new low is weaker than the last, while buyers quietly accumulate. When sellers are exhausted, buyers break out — usually with strong momentum.
📈 Trading the Retest:
Many traders avoid entering immediately on breakout to reduce risk. Waiting for a retest allows confirmation and a tighter stop loss, increasing the trade’s risk/reward potential.
✅ Final Thoughts
This GBP/USD trade setup offers a clean and well-structured bullish opportunity, backed by:
A strong chart pattern
Clear support/resistance levels
Logical entry and exit points
Solid risk management principles
If price respects the structure and provides bullish confirmation at the retest zone, we may see a clean push toward the 1.32959 target.
Pair: GBP/USD
Timeframe: 1-Hour (H1)
Date: April 18, 2025
Trading Bias: Bullish (Long Setup)
🔍 Overview of Price Action
The GBP/USD chart showcases a strong technical formation: a Falling Wedge breakout, a widely recognized bullish reversal pattern, emerging after a well-defined impulsive bullish wave.
This price action follows a textbook flow:
Impulse Move Up – Strong bullish rally leading to resistance.
Corrective Phase – Price entered a wedge-shaped pullback with weakening bearish momentum.
Reversal Signal – Price broke above the wedge resistance line with strong bullish candles.
Breakout Retest Opportunity – Price is now approaching a resistance-turned-support zone, creating a potential entry for a long trade setup.
🧩 Pattern Analysis: Falling Wedge
Falling Wedges are significant because they show:
Decreasing bearish strength over time.
Bullish divergence potential (if supported by RSI/MACD, though not shown here).
A breakout above the wedge confirms buyers regaining control.
📌 Pattern Structure:
Trendlines: Both upper and lower bounds are descending, converging toward a point.
Volume (assumed): Typically fades during wedge formation and spikes on breakout.
Breakout Confirmation: Occurred after a retest of the support zone.
This wedge appeared within a broader uptrend, adding trend-following confirmation to the bullish breakout.
📊 Key Technical Zones
🔽 Support Zone: 1.32000 – 1.32100
Price previously found demand in this area.
This level acted as the base of the falling wedge, forming multiple reversal wicks.
It’s a critical area for invalidation and Stop Loss placement.
🔼 Resistance Turned Support Zone: 1.32650 – 1.32800
This level was previously a ceiling for price (multiple rejections).
Upon breakout, it becomes a retest zone — a key area to look for bullish confirmations (e.g., bullish engulfing, pin bar).
Confluence of structure and pattern breakout = high probability zone.
🎯 Target Zone (TP): 1.32959
Target is projected based on:
Height of the wedge added to the breakout point (measured move).
Previous resistance zone, acting as a magnet for price.
Psychological level around 1.33000, often tested in trending moves.
🛑 Stop Loss (SL): 1.32101
Placed slightly below the wedge’s low and the support zone.
Ensures proper invalidation if price reverses unexpectedly.
🔄 Trade Plan Summary
Setup Details
Entry Type Breakout and Retest Confirmation
Entry Zone 1.32650 – 1.32800
Stop Loss Below 1.32100
Take Profit 1.32959
Risk/Reward Approx. 2.5:1 (depending on entry)
Confirmation Bullish candle or reversal pattern on retest
🧠 Psychological & Technical Confluence
Market Sentiment: Shift from bearish correction to renewed bullish momentum.
Liquidity Grab: Price may have trapped early shorts below the wedge, fueling the breakout.
Breakout Psychology: Traders waiting on the sidelines often jump in after the retest — increasing bullish pressure.
🔁 What to Watch for Before Entry:
Bullish candle on retest of the breakout zone (1.32650–1.32800).
Failure to break above may indicate a fakeout — be cautious if price consolidates below the retest area.
News Impact: Watch for USD or GBP economic events that could cause volatility or invalidate technicals.
📘 Educational Notes (Optional Section for TradingView)
💬 Why the Falling Wedge Works:
A falling wedge shows a loss of control from sellers. Each new low is weaker than the last, while buyers quietly accumulate. When sellers are exhausted, buyers break out — usually with strong momentum.
📈 Trading the Retest:
Many traders avoid entering immediately on breakout to reduce risk. Waiting for a retest allows confirmation and a tighter stop loss, increasing the trade’s risk/reward potential.
✅ Final Thoughts
This GBP/USD trade setup offers a clean and well-structured bullish opportunity, backed by:
A strong chart pattern
Clear support/resistance levels
Logical entry and exit points
Solid risk management principles
If price respects the structure and provides bullish confirmation at the retest zone, we may see a clean push toward the 1.32959 target.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.