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I’m going to get started today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting all the way out here on the Weekly Chart, get a longer-term perspective on this currency pair. Then we’ll go down to some of the smaller compressions. First off, here on the Weekly Chart, I want to take a look at that blue box that you see right in the middle of the chart. It’s kind of long and it goes back in time, all the way back into 2010.
What’s important about that blue box is the shaded areas at the top and the bottom. The blue-shaded area at the bottom of the blue box and the green-shaded area at the very top of the blue box. Follow the blue-shaded area back first because that’s closest to the market price. We could see timeframes back in history where the market found support into that blue-shaded area, and that goes anywhere between the 1.5900-level. Maybe the upper-1.5800s, towards 1.6000.
You could see there’s a few months here, where the market found support into that blue-shaded area back into 2013. And we go back a little bit further. We see some support back here in 2012. We go back a little further. We even see some resistance underneath it here, back in 2012. We see some congestion and support in 2011. More support back in 2011. More support back in March of 2011. Then we even see some resistance again far left-hand side, back into 2010.
So, clearly this blue-shaded area has been a historically significant price zone between 1.5900 and 1.6000 here for the GBPUSD. As long as it stays above it, potential to bounce off of it as support and go back up towards the top of the blue box, which is the green-shaded area at the top. And we’ve studied that during the Trade Room. We see current resistance, but historical resistance here and here, back in 2012 and here, back in 2012. And further back in time, even back into 2010, you see resistance in that green zone, and then the purple-shaded area right in the middle. We’ve studied that to have historical support and resistance and congestion right in the middle of that blue box.
Well, most importantly of course is the bottom. The blue-shaded area, 1.5900. We’ve seen that historically be evidence of support into that area. That’s where we are today. As long as we stay within or above that 1.5900-level, I expect we’re looking for support because that’s what history shows us. How do we know when that changes? And I’ll zoom in a little bit here, and we studied this in the Trade Room yesterday. This is how we’ll know that changes, and you could see once it got a clear single candle body open and close underneath that blue zone, it gave us a higher expectation that we were looking for it to go higher.
Until, and I’m looking back there where that lower blue circle is. At the bottom left-hand side of the chart, you see the blue circle. You see the clear single candle body underneath it. It continued to go lower. Another example of that is on the other side, when it turned around, found congestion, blue and green zone. Opened and closed above it. Then it continued to go higher. So, how will we know it breaks out of this zone here highlighted with the blue box? It will need to open and close clearly outside of that blue box. Until it does, then we have to have some expectation that we look for it to bounce around as support and resistance inside the box.
So, 1.5900 will be a key support level for the day today, here on the GBPUSD. Take that information now down to the Daily Chart. Here we are, challenging 1.5900. We’re all the way at the bottom of the chart. You could see what happened the last time we were in this blue zone. It didn’t quite go as low as we are right now, but you could see it found support. Went back up into the green-shaded area. Again, 1.5900. Kind of that breaking point here for the day today. As long as it stays above it.
In fact, let’s see if we can get that black line right on 1.5900. I’m just going to bring up the parameters here. Let’s make sure it’s right on 1.5900, and we’ll click okay. So, that black line is exactly 1.5900 at the bottom of the blue box. Bottom of the blue-shaded area. As long as we stay above there, potential support. So, right now, given the history, it would be very discouraging to sell it unless you’re already in a sell. If you sold it up here at the purple zone or maybe even the green zone, then you’re now protecting profit. If you already sold it, you’re protecting profit. If you didn’t already sell it, I would not suggest selling it right now as it approaches 1.5900.
What’s it going to take for us to sell it again? It would have to break underneath. Single candle body open and close underneath 1.5900 before we would look for a new selling opportunity. So, for the day today, 1.5900 is kind of that hinge point today. If it stays above it, finds support, we look for reversal back towards 1.6000, maybe even back towards the 1.6100-level, where the purple-shaded area is. If it breaks underneath 1.5900 today, then we look for the continuation lower.
Forex Black Book, by the way, turned green this week. Could be just a fluke because we did see that little bit of a hop up after such a long downtrend. We saw it turn green. If it continues to go lower, of course over time I would expect it to turn red again, but be watchful for clues and evidence of reversal because that could be our first precursor to a little bit of a pullback here as we look for support and reversal here for this pair. 1.5900. That key decision point in the market today for the GBPUSD.
Let’s take that information down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, I’ll just zoom it out a little bit like this. There’s the same level. There’s 1.5900. There we are, approaching 1.5900. Again, as long as it holds within or above there, I would be very discouraged about selling this close to 1.5900. Now, again, if you sold it up here in the purple zone or up here in the green zone, you’re just protecting profit, so that’s not a big deal for you. If you’re not in a sell, I don’t suggest selling it on top of 1.5900. Only if it opens and closes underneath it do I expect that to become a selling opportunity. More likely you’re watching for support and potential clues to reversal here for the GBPUSD today for it to go back up.
Green trend bar. Green arrow would give you an opportunity for that as we settle down here into support. Two days ago, back on Friday actually. Friday we saw bank flow levels pop up here at the bottom of our blue-shaded area. We didn’t get any yesterday, and I think that’s probably because we had a US bank holiday yesterday, but nonetheless, we did, on Friday, get new bank flow levels and they were right here of the blue zone. So, I would suspect that somewhere down here around 1.5900 we’ll see the buyers protecting this price level, protecting it from breaking through there because we’ve seen history do that over time, back. All the way back into 2010.
So, clearly the spot to watch is 1.5900. Staying above it, we look for reversal to go back up. Getting underneath it, we’ll look for the continuation lower. Where does it go if it goes lower? I would suspect all the way back down here to this pink-shaded area. The 1.5727-level. So, quite a long ways down. If we go down a little farther, there’s probably some bumps in the road between the blue and the pink-shaded area at the bottom. 1.5900 and the 1.5700s. We’ll look at that zone between there during the Trade Room later on today. See if we could pick out some other clues to support between the blue zone, 1.5900, and that pink-shaded area, but right now that’s the zones to watch for the day on the GBPUSD.
