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I’m going to begin the day today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting all the way out here on the Weekly Chart, just want to get a long-term perspective of the trend that we’ve been in for quite some time. We go all the way down here to the bottom of the chart, all the way back down here into the 1.4700s. We’re looking all the way back into July of 2013, so just above a year ago. A little bit more than a year ago, we saw the market bottom out and start moving back higher, from the 1.4700s, all the way back up here, into the 1.7000s, towards 1.7100 in the most recent days.
So, quite a long-term uptrend. So, there’s been real no change of that trending pattern. Within that trending pattern, we can identify higher highs and higher lows. To identify a change in that pattern, we’d look for clues to changes, which would be lower highs and lower lows, lower resistance and lower support. We’d look for a break of a trend line, and we haven’t really seen any of that yet. If we take that same blue trend line and apply it over here on the Daily Chart, we could see it coming up from the bottom and the market approaching, getting closer to it, but hasn’t reached all the way down towards that trend line.
So, we can know that we’re still really within an overall longer-term uptrend. We’re seeing a little bit of a retracement, a little bit of a pullback, but really you go back in time; we’ve seen this many times, where the market pulls back a little bit and then returns in the direction of the trend. So, I believe we’re still within the parameters of the overall uptrend, even though right now we’re having a little bit of retracement. So, that being the case, what we’re looking for is an area of support, a baseline where the market comes to a stop with this retracement or this fall, and then potentially returns back in the direction of the overall longer-term trend, which has been up.
And I think that probably will come down here, closer towards the blue trend line, down here towards the orange-shaded area. We’re currently finding a little bit of support, intraday support here into the blue zone. We saw that yesterday, some support into the little blue-shaded area, and now we’re seeing it so far today. We’re right about the 1.7055, 1.7060-level, where currently the market is holding as support. A clear breakdown of that support, which is the blue-shaded area, and I’ll go ahead and put a little black arrow here. A breakdown of that support, again, would challenge our area of support down here, the blue trend line and the orange-shaded area.
Also, taking Fibonacci retracement measurements from the low here, and I’m just going to put a little black X down here. Right here. This low just between the yellow and the purple-shaded area. Taking Fibonacci from that low where the black X is to the current resistance high, the highest peak high that we see here on the chart, interesting enough, puts the .382 Fibonacci retracement level at 1.7000. Well, that is down here closer towards the orange-shaded area and the blue trend line. So, 1.7000 is the .382 fib of this current leg of the uptrend. So, it would be expected that if we breakdown through this blue zone, that becomes our next area of support.
Follow the blue zone back a little bit. You could see, of course, over the past several days, we’ve seen support here, but we go back a little bit further and we also see resistance. So, clearly a breakdown of this resistance, this support, our next area just looking at that same information back here in the past, the orange-shaded area becomes our potential target.
So, what do you do with all this information today? Well, if you’re still in the mode that we’re in, retracement, and you’re looking for it to continue down towards the trend line, then there’s a possibility that you’re looking for opportunities to sell this currency pair. And I think there’s really two reasons to sell this currency pair. First off would be a rally back to resistance, and right now our resistance would be this green-shaded area. Over the past – what – two weeks, we’ve seen support here into that green zone. Right there into the upper-1.7000s, towards the 1.7100-level. That green-shaded area kind of hard to see. The bottom of that red box. Let’s say that. Underneath there would be our resistance.
The other thing we’d be looking for would be a breakdown of support. I don’t think it’s a good idea to sell on top of support. I think there’s too much potential for a bounce off of it, like we saw yesterday and so far today. I don’t think it’s a good idea to sell on top of support. I think if you’re going to look for a sell, you’re looking for a breakdown of that blue-shaded area and a breakdown of that support or a rally back into resistance.
So let’s take all of that information, knowing the green zone is resistance, the blue zone is support, the orange zone is our next support and the blue trend line. Let’s take all of that information down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, there’s our same green zone that would be our resistance, so you would sell into resistance. Our blue zone, which is holding as support, and you’d wait for the breakdown of that blue zone for a selling opportunity. Right now we’re finding support into that blue zone, 1.7055, 1.7060 area. We’re seeing that over the past couples of days.
So, again, sellers, if you’re looking to sell, resistance, green zone, under the blue zone. The other side of the story, of course if there are buyer already looking to get into this market, your buys, you have a potential here into the blue-shaded area. We’re seeing support between the 1.7040, 1.7055-level. If you’re looking for a buy, this would be one of those potential areas to do it, here into the blue zone, knowing that your risk – a risk associated with any buys right now – would be just underneath this spike low, so you have a fairly minimal risk. You’re probably looking at somewhere around the 35 or so pip risk opportunity here, and then you’re targeting back to the green zone or higher if you decide to buy it, and even a potential push back towards the pink zone.
So, that’s your risk today if you decide to buy it in the blue zone, targeting the green zone, stop underneath. If you don’t buy it there, then your next opportunity to buy it, I think, would be all the way back down here towards the .382, 1.7000, into the orange-shaded area, and the blue trend line. One last thing here on the 4-Hour Chart. We did finally get some bank flow levels come back in yesterday afternoon. And if you take a look at where those bank flow levels are, they’re confirming the green-shaded area as resistance. So, it’s my personal expectation that not really looking for a buy today, but more likely looking for a sell on a rally to resistance, the green zone, or a breakdown under the blue zone to target back down to the orange zone in the short term. Then, as it gets down there towards the blue trend line, the orange-shaded area, we can then reevaluate and look to see if we’re going to look for this to go back in the direction of the longer-term trend that’s been in place, remember, since July of 2013 for the GBPUSD.
