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I’m going to get started today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting on the Daily Chart, we could see that this currency pair has been in an uptrend for quite some time. We go all the way back into July of 2013, at the bottom left-hand side of the chart, all the way down into the low-1.4800s, and capping out all the way at the top of the chart into the 1.6800s.
I have a trend line connecting with our most recent lows that we see here on the chart. It starts down here into November 2013 at the bottom of this range that we can see here. Bottom of the orange-shaded area. Connects there, and we could see one time challenging here into the lows into early February, and I have it connected to the low here, into late March. March 23rd. It connecting that blue trend line there.
We could see one time, several days ago, coming down to challenge here, and that was right about the mid-1.6500s. 1.6550 or so came down and challenged that trend line, repelled once again off of the trend line, and pushed all the way back to the highest highs into the 1.6800s. Now, over the past three days or so, we’re seeing some bears take over for this pair, once again falling back off of 1.6800, unable to break through that last resistance high and now pulling back down.
As it comes back down, we’ll be looking for areas of support and the potential to return back up in the direction of the trend, but also we’ll be watching for changes of the trending pattern and a breakout, and possibly a new trend and a turn back down for the GBPUSD. The blue trend line will be a clear indicator of that breakdown. If it stays above the blue trend line, we look for a rally back towards the highest highs once again. If it breaks below that blue trend line and we see a new lower low, we likely look for a change of the trend and a push back down into the low-1.6000s. It could even be down towards 1.6300, 1.6200, or possibly even down towards this orange-shaded area and this low down here into the 1.5900-level again.
But of course that’s going to take a change of the pattern of the trend. When I talk about patterns of the trend, in the uptrend, I’m talking about higher highs and higher lows. And of course the blue trend line there helps us identify the fact that, within the pattern of the uptrend, we’ve seen higher lows. If we see a change of that pattern, that’s when we expect to see some new lower lows made and the market to continue to be bearish.
Over the past several weeks, we have seen the Forex Black Book trend bar be red down here at the bottom, and that has not changed today. Even though over the past few days we’ve seen a challenge of the highest high, it did not change degree and it stayed red, so that, again, gives us opportunities to look for new sells on rallies into resistance or breaks of support for the GBPUSD.
Let’s go ahead and zoom in one time here on this Daily Chart so we can get a closer view of some of the support and resistance zone. The green zone, of course, being our resistance high all the way at the top of the chart. That’s not too hard to see. As long as we stay underneath that green zone, there’s potential for us to see reversal and go down as we’ve seen so far. Any break above that green-shaded area, we look for a continuation higher. Our next support, and of course along that blue trend line, comes all the way down here into the purple-shaded area where the blue trend line sits, and that would be the next support down into the 1.6600s. And any break under the blue trend line, as I just mentioned, and that purple-shaded area, we’ll likely look for a change of the overall trending pattern and new lows to be made.
Right now we’re holding pretty steady inside this yellow-shaded area. Yellow-shaded area goes between 1.6700 and 1.6735. So, let’s go ahead and put two arrows here. As long as we stay within or if we get back above the yellow zone, we look for challenges back towards the highest highs and the green-shaded area. If we see a breakout underneath the 1.6700-level and the bottom of that yellow-shaded area, we’ll likely look for that turn back down to the purple-shaded area.
Let’s go ahead and take that information down to the 4-Hour Chart. And as we get down here, we could see those same shaded zones here. The green zone up here at the top. The yellow zone, where the current market is finding congestion. We can see easily, at 1.6735, we have seen resistance over the past several four-hour candles. Even going back into Friday, we see resistance underneath 1.6735 here, and for the past several hours, we have seen it holding underneath that yellow-shaded area.
If that’s any clue, we could be looking for the breakdown of the yellow zone, a breakdown of that 1.6700-level, the double-O price level, and we’ll look for it to begin pushing down into the mid-1.6600s again, back towards the purple-shaded area. If you’re already in a sell, either from the highest highs or underneath the 1.6735-level, look to protect profit as it pushes down towards 1.6700. And the breakout underneath there, look for further profit back down to the purple-shaded area.
Let me zoom out one time so we could see some further history. And there is that yellow zone and the purple zone as our next potential support levels that we can see here. Staying within or above, and I would expect getting back above 1.6735 would be your signal for it to go back higher towards the green zone. Until it gets back above there, there’s potential for the bears to continue to stay in control. Underneath 1.6700, sell back towards the 1.6000s or even in towards the 1.6620s. The bottom of the purple-shaded area.
Over the past few days, we have seen the bank flow levels capping the market all the way up there into the green-shaded area. If that continues to stay that way, then we’ll look for further falls back down. We have seen, over the past few days, a new red arrow with the Forex Black Book. Red signal arrow with the red trend bar gives you a selling opportunity. And of course if you sold it on that last red arrow and of course into the bank flow levels under the green zone, you’re now sitting with profit. Just on that last red arrow, just on that last red arrow, the open being right around 1.6770, you’re now seeing about 60 pips of profit from the last red arrow with the Forex Black Book and the red trend bar.
I don’t think there’s a possibility of getting a new red arrow right now. I think it would have to go into a period of hesitation or consolidation before we can get another red arrow. We’d also look for today’s bank flow levels to be falling back down here towards the yellow zone if we’re looking for a new sell. So, two reasons to sell this would be staying underneath 1.6735 or a breakdown of 1.6700 becomes the fall down towards the purple-shaded area. We’ll watch for bank flow levels possibly back down here on top of the yellow-shaded area later today when they’re published and we’ll take a look at that during the live Trade Room later on today.
I think those are your opportunities to sell. Into the bank flow levels or a break down of 1.6700. Otherwise, if you’re looking for a buy scenario for this currency pair, I think you’re rather looking for it back down here towards the purple-shaded area or a break back above 1.6735.
One last thing. I’m going to take Fibonacci from the lowest low we see here, down in the blue-shaded area, to the current resistance high. And in doing that, we find the .382 at 1.6680. That’s just underneath our yellow-shaded area. 50% sits down here into 1.6639, into the middle of our purple-shaded area. One more fib is this low right here to the highest high on the chart. So, basically the shorter leg of the trend. We do see some overlap right here into the middle of this gray-shaded area. That’s right around the 1.6680-level, and then our next fibs overlap down here or get close down here into the mid to low-1.6600s.
So, continuing to pressure lower into the 1.6680s. It’s a possibility based on Fibonacci here, and beyond that we’re back into the middle of the purple-shaded area for the GBPUSD today. And as it gets closer towards the blue trend line, we’ll look for potential support and the possibility of rallying back in the direction of the trend for the GBPUSD this week.
