The chart shows that GBP/USD has been in a wide consolidation range for most of August and early September. The price repeatedly bounced off a key pivot point around 1.3470 (marked by the green line), which acted as both support and resistance.
However, in the last few days, a significant event has occurred. The price has successfully broken above this long-standing range and has been creating new, higher highs. This decisive breakout is a strong signal that buyers have taken control of the market. The move is also supported by consistent bullish candle formations and a lack of significant bearish pullbacks.
Trading Direction and Rationale
Given the clear breakout from the consolidation range and the strong bullish momentum, the highest probability move is to initiate a BUY order.
Why a BUY?
The most powerful trading signal is a confirmed breakout from a range. This indicates a shift in market structure from indecision to a clear trend. The price has not only broken above the range but has also sustained this upward movement, showing buyer strength. Trading in the direction of a new trend is generally the most effective strategy, as it aligns with the dominant market force. The immediate target for this buy order would be the next key resistance level, which based on historical price action not shown in this specific chart, would be around 1.3710. The current upward momentum suggests that a continuation of the rally is the most likely outcome.