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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