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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 uptrend for quite some time. We go all the way back to the left-hand side of the chart. We started down into the 1.4800-level back in July of 2013. Since then, we’ve been seeing higher highs and higher lows, as the market continued to rise, pushing, most recently, into the highest high, into the 1.6800s.
Now, through the life of this trend, we’ve seen a couple of periods where the market went into a bit of a range, finally broke out, and continued the uptrend. We could see that on the left-hand side orange box here. We found support here into the bottom blue-shaded area, right around the 1.5890s, up into the 1.5930s. We found support for several weeks here into that blue-shaded area, bottom of the orange box. Finding resistance into the top blue-shaded area and that left-hand orange box right around the 1.6260s, up into the 1.6290s. Found resistance.
Then eventually we broke up, got above that first orange box, above that blue-shaded area, came back down, challenged it as support multiple times. We see that became our support after the breakout above it. We challenge resistance highs into the 1.6600-level and continue to fall back down, finding support the last time right around where these two trend lines connect into the 1.6300-level and of course making our new high.
So, now that we’ve seen a new high, I’m looking for something very similar to happen like what happened over here the last time we broke out and made a new high. If you take a look at this, and I’m going to put a circle shape right here so we can really get a sense of what I’m looking at. Let me see if I can get it connected here, and draw it out like this. There’s that circle right there between our two orange-shaded areas. Take a look at that, where it opened and closed above the blue-shaded area, came back down, tested as support, and then began the next new leg higher.
So, now what I’m looking for is, over here on the right-hand side, for that to be duplicated. Let’s go ahead and put another orange circle up here. Top right-hand side of the chart. I’m looking for it to come back down, find support, and start working its way back higher again, potentially just finding support and going into a bit of a range like it did here the last time we broke out and made a new high.
So we’re definitely looking for support above the 1.6600-level today for the GBPUSD. Let’s go ahead and zoom in a little bit here on the Daily Chart. Now that we’ve seen that history on the left-hand side, we could see that we’re looking for support. This little purple-shaded area right around 1.6645 to 1.6665. Purple-shaded area right here. Let me take this circle off now. That purple-shaded area historically has seen some resistance. We’re not finding some support there right around the 1.6645-level. As long as we hold above there, the potential to rally back here towards the green-shaded area and the highest high at the top of the chart. If it breaks underneath there, our next zone of support will be this blue-shaded area.
Taking Fibonacci from the lowest low to the current high that you see here on this viewpoint on the Daily Chart finds the .236 fib right at the blue-shaded area, at the top of the blue-shaded area. So let’s go ahead and put a couple arrows. So, today we’re looking for that support here into the 1.6645, 1.6650-level. The purple-shaded area. We’ve already seen it already today. If it breaks through there, our next support of course will be this blue-shaded area. Historical resistance back here on the left-hand side helps us identify that along with the .236 fib, and these resistance will obviously be our next support for this currency pair. And a breakdown through there likely challenging back down towards the trend lines for the GBPUSD.
Resistance, of course, is the highest high. All the way up here into the green-shaded area at the very top of the chart. That is into the upper-1.6700s, towards the 1.6820-level. That will be our resistance for the day today.
So, now that we see those, let’s go ahead and take that information down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we could see that same purple-shaded area where we’re currently finding support. A break underneath there, and let’s go ahead and put a bearish arrow here. A break underneath the 1.6650-level, we will next challenge the 1.6600-level and that’s that next blue-shaded area that we see just underneath the market.
I don’t expect that we’ll look for resistance – major resistance – until we challenge back to the green zone. There may be a little bit of resistance right here into the 1.6730-level. We’ve already seen a little bit there, but take a look at our bank flow levels from yesterday. Offering resistance, the market shying away from those bank flow levels and driving lower. If today’s bank flow levels come out at a lower level, if they come back down here into the low-1.6700s, we may be looking for some more bearish side pressure, pressuring back down towards the 1.6600-level. All the while though, the trend is up, so what we’re looking for is the market to find support and start working its way back higher in the direction of the trend. The next level, I think, that will be predominant support will be the 1.6600-level.
One last thing here on the 4-Hour Chart. Let’s go ahead and take Fibonacci from the current low that we see down here at the bottom of the chart to the current high. We are seeing already the challenge of the .236 fib of this short leg of the trend, but what’s interesting here is there’s an overlap. The .382 of that trend range – .382 Fibonacci retracement level – is at 1.6603. That’s the top of the blue-shaded area. So, once again, my expectation will be that we see a likely breakdown of the 1.6650-level and we push back down to 1.6600 as our next support.
So, that being said, your next opportunity to sell this would be a break of 1.6650. A break of 1.6650, target back down to 1.6600. A buy at 1.6600 targets back to the highest high. I don’t think I would sell it until it breaks underneath 1.6650, because obviously we have found some support there now. If you’re not willing to wait all the way down here into 1.6600, you could look for a buy right now into the 1.6650-level. Still, your same target will be the green-shaded area and the highest highs for the GBPUSD today.
