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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 overall the long-term trend has been bullish or uptrend since June and July of 2013. We’ve been climbing from all the way down here at the bottom left-hand side of the chart into the 1.4800-level, climbing all the way up to the chart into the 1.6800-level.
So, quite a long uptrend for this currency pair. We’ve been studying it over the past several weeks in the Trade Room about these three distinct ranges – the orange ranges that you see. The first range, second range, and third range. The difference over the past few days that we’ve seen over the past several months is the fact that we’ve now broken underneath the third range. You could see over here you never broke underneath the first range and it went up. Never broke underneath the second range and it went up. And now, at the top right-hand side of the chart, this is the first time over the past week or so that we’ve changed the pattern of the trend and broken underneath that range.
It could be a sign of things to come, but we definitely want to consider the fact that we are still in an overall uptrend here for this currency pair. Two different trend lines. Of course the blue trend line representing the longer-term trend, and we are underneath that blue trend line. Red trend line: a shorter leg of that trend, connecting with the low here right around the 1.5850s, and the low here where the blue and the red trend line come together right around the 1.6230s. So, you could see the red trend line connecting a little bit differently than the blue trend line.
Go ahead and zoom it in here on the Daily Chart. And as you zoom it in here, you could see the blue trend line, the longer-term trend line. We’re underneath there. Red trend line, the shorter-term trend line. We’re just sitting on top of that. So, we’re challenging that red trend line and you could see where it connects the bottom left-hand side of the chart, and this low right here. We’re challenging that over the past two or three days. Has not broken underneath it.
The yellow-shaded area here that you see on the chart. Follow the yellow-shaded area back in time. You could see some historical resistance back here into January and then some resistance back here again in December along that yellow-shaded area. One last thing that I want to point out here on the Daily Chart, and I’m going to put a little black X on the chart. Right there where the red trend line and the blue trend line connect. That low there where that black X is. Measuring from that black X to the highest high with the Fibonacci tool – Fibonacci retracement levels – puts the .618 Fibonacci retracement level at 1.6468.
So, currently, we have the red trend line coming here into the upper-1.6400s, you have the Fibonacci level coming here into the 1.6400s, and you have that horizontal level of support and resistance coming here into the yellow zone. So, many indicators of support right here into the mid to upper-1.6400s. So, as long as we stay above this yellow-shaded area, of course there’s potential support and we look for some smaller rallies higher back into resistance, which of course, at this point, sits all the way up here into this green-shaded area, underneath the blue trend line. That’s all the way back into the mid-1.6500s. So, there’s your current support. The yellow zone. And the red trend line and the Fibonacci. There’s your current resistance, which would be the blue trend line and the green-shaded area.
If you’re looking for a buy today, right here into the yellow-shaded area likely is your best opportunity to buy it. As close as possible to 1.6450, 1.6460, 1.6470. Those become your best opportunities to buy. Stop underneath the yellow zone, underneath 1.6440, you look to target back here into the mid-1.6500s and the green-shaded area. Likely, over the past two days, if you’re looking to do that, you’re already in a buy for the GBPUSD, targeting back to the green-shaded area.
Now, if you’re looking on the other side and you’re thinking: “Well, it’s a downtrend. The Forex Black Book trend bar is red. We’ve been going down over the past several weeks. We’ve broken down underneath this blue trend line.” If you’re looking for a sell opportunity, of course the green-shaded area becomes a predominant selling opportunity into the low to mid-1.6500s. The other side of that would be a breakdown of all of our indicators of support. The yellow-shaded area. The Fibonacci. The red trend line. If the market gets underneath our current support, we then look for it to continue to pressure lower.
Let’s go ahead and take this down to the 4-Hour Chart. And as we get down here to the 4-Hour Chart, we can see some more detail about that yellow-shaded area, where the current market is holding as support. And you could see multiple days holding as support. There’s the red trend bar. Forex Black Book. We do have a yellow arrow that showed up over the past several hours. No red arrows. Red arrows would give us a indicator of selling. A sell signal for the Forex Black Book. No red arrows, so only a yellow arrow. I think, to get a red arrow for the Forex Black Book, we’re going to need to see a pullback, likely back up here into the green-shaded area and into the mid to upper-1.6500s. So, I don’t think we have a chance to see a red arrow today. It would have to go back up here before we could see that happen for the GBPUSD.
Bank flow levels though have shown some interest over the past few days. We could see the past three days of bank flow levels falling in a falling pattern. Yesterday’s bank flow levels went between the 1.6520s and the 1.6560s. So, we’ll discuss today’s levels later on today in the Trade Room, so be sure to be around for that, but definitely the bank flow levels implying selling pressure as the market has pressured back down towards the yellow zone.
So, again, your clear opportunities today. Fairly low risk for any buys here into the yellow-shaded area. You could see over the past several four-hour candles, three days or so, holding support here into the 1.6480, 1.6470s. That’s where you’re finding support. A breakdown of there looks for the continuation lower. Your selling opportunities are the bank flow levels, back into the green zone or under the yellow-shaded area. Really only one buying opportunity right now, and that’s as close as possible to 1.6480. We do not have bank flow buy levels so that’s something that you might want to take note of; that there are no buy orders present in the market, or there are minimal buy orders present in the market. Predomination of sell orders based on the bank flow levels are in the market right now.
So, buying, use smaller risk. Target the green zone. At some point, we’ll look for this to turn, breakdown through the yellow zone, continue all the way back down into the mid-1.6300s for the GBPUSD.
