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I’m going to begin the day today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting here, on the Daily Chart, we could see that this currency pair has been in an up trend for quite some time. We started all the way down here into the 1.4800s back in July of this year, and we’ve been climbing ever since, pushing all the way up, over the past several days, into the 1.6200s at the top of the chart. Now, over the past few days, past couple of days, we’ve seen a fall from this currency pair from the mid-1.6200s all the way back down here into the 1.6000-level.
The blue-shaded area represents our current support, and we could see the past couple of candles – today’s candle and Friday’s candle – closing here into this blue-shaded area. Today’s candle opening up here into this blue-shaded area. Follow that backwards in time; you could see this area of support right here. Just several days ago, you could see that support into the blue zone, but follow it even further back to the left-hand side of the chart and you could see some historical support into that same price zone.
That price zone goes between the upper-1.5900s, around 1.5980 up into the 1.6035-level. So, we have about a forty to fifty-pip zone highlighted there in blue that would act as our current support level. Just above that would be our current resistance, and that’s this green-shaded area we see just above that going between the 1.6129-level and 1.6154-level or 1.6164-level. You could see that holding here into resistance. Several days ago, we could see the resistance here, a fall back down, a challenge above it, and now we’re right back underneath that same green-shaded area as resistance.
You follow that back to the left-hand side of the chart and you can see some resistance on the left-hand side of the chart. Even just peaking into the left-hand side of the chart, you could see some resistance there. If I was to scroll back a little bit, you could see even more resistance back in time, along that green-shaded area, between 1.6130 and 1.6165. So, that green zone is our current resistance. Above that, of course, would be the highest highs up here into the purple-shaded area, into the mid-1.6200s.
Now, as it approaches the blue-shaded zone as support right now, we also approach the bullish trend line. We could see that bullish trend line coming up and that trend line has been in place, like I said, since all the way back into July. We’ve seen the rising lows along that trend line. So, any challenges in that trend line become potential support, but that also becomes a clue that if it gets underneath that trend line, we start to see a break underneath our previous low that’s here into this blue-shaded area. We could be looking for a change of the trend and a continuation back down into lower levels.
And as we go back down, we could see that there would be potential supper here into this yellow-shaded zone. Follow that yellow-shaded area backwards in time, around the mid- to upper-1.5800s; you could see some historical resistance back here on the left-hand side. As it was going down, came up underneath that below zone and found resistance before continuing the down trend. You could also see, on the far left-hand side of that yellow zone, some historical support.
So, just a real quick recap. Our current support is the blue-shaded area. The next support down is the yellow-shaded area. If our current resistance would be the green-shaded area, next resistance above that would be the purple-shaded area. And down here into this blue zone, where our current support is, is where we also see the bullish trend line coming up from the bottom of the chart. So, any test, as long as it stays within or above that blue zone, I expect we’re looking for it to turn back up in the direction of the trend. If it ever breaks underneath that blue-shaded area, we’ll likely look for a continuation of the down trend.
Take that information down to the 4-Hour Chart and here is that blue-shaded area and we could see that over the past several hours, we have found support there. We could see where last week’s bank flow levels are. These are last Friday’s bank flow levels sitting up here towards the green-shaded area. It’ll be interesting to see where today’s bank flow levels are. Are they going to be right there into that green-shaded area like they were last week? If so, we will definitely expect some resistance there and the possibility of selling to go back down in the direction of the current downward momentum that we’ve seen over the past few days.
So let’s go ahead and put a couple of arrows here to show our expectations for the day today. Of course, as we could see right now, staying above the blue-shaded area, we look for support to go back higher for the GPBUSD. A change in that attitude would be a breakdown underneath the blue-shaded area. And I would suspect a break underneath this bullish trend line would also give us the confidence that it’s going to push all the way back down here towards this yellow-shaded area.
Now, on the way up, we can see where last Friday’s bank flow levels are. We could see where these historical resistance are here into the green-shaded area. So, on the way up, if we’re going to find resistance and the possibility of going back down, our closest level to watch for that would be here into the low-1.6100s, looking for resistance and a bounce back down. I actually want to take one other trend line. I’m not sure what this is going to look like because I haven’t done it until right now, but I’m actually going to take one other trend line and put it in here. Just about – let’s just put it right about right here.
And interesting enough, this shorter red trend line. We’re already underneath that. We saw the break of that red trend line here last week, but interesting enough is, as it goes back up, it will also challenge underneath that trend line. So, definitely a possibility of resistance along this bullish trend line. The red trend line underneath that green-shaded area as resistance, which has shown historical resistance. So, definitely something that we’ll want to pay attention to as the day goes on and maybe even going into tomorrow.
We could even zoom this in a little bit here on the 4-Hour Chart. Begin developing some Fibonacci levels of the current down trend. If we take Fibonacci from the previous resistance high or the highest high we see up here at the top of the chart to the current low, we find the .382 at 1.6100. The 50% happens to be the bottom of that green-shaded area at 1.6131. The .618 – top of the green-shaded area – at 1.6161. So that green-shaded area is mounting up to be pretty decent resistance based on historical resistance into the green zone we see underneath the trend line. Definitely expect to watch for today’s bank flow levels and the Fibonacci levels holding as resistance. And of course, our current supports are the blue-shaded area.
So, if you’re looking to sell this currency pair today, your best opportunity to sell this currency pair would be a rally into resistance towards that green-shaded area. If you’re looking for a buy opportunity in the direction of the longer-term daily trend, the closer you could get to the blue-shaded area or even down towards the blue trend line becomes opportunities into support to look for buying opportunities. So, buying down within that blue-shaded area is, I think, as close as possible to the bottom so it minimizes your risk. Your stop would likely go below this low over here on the left-hand side if you were to get into a buy. So, the lower you can get, the better. Right now I don’t think is a good low-risk scenario to buy. So, down within that blue-shaded area, closer to the blue trend line becomes a better buying opportunity. All the way up here towards the green-shaded area becomes your best lowest risk, highest reward selling opportunity for the GBPUSD today.
