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I’m going to begin the day today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting on the Daily Chart, obviously we have been in an uptrend for quite some time. We go all the way back into June and July of 2013. Bottom left-hand side of the chart, where we began the uptrend, all the way down into the 1.4700s.
Now, through the life of the trend, we’ve seen a familiar pattern taking shape, where we’ve gone into bit of a range or an area of congestion before breaking out in the direction of the trend. You could see that starting on the left-hand side. We were moving higher within the trend. Then we went into this period. The first, left-hand side, orange box here between the two green-shaded areas finding support at the bottom, resistance at the top, and this went between – we’ll look at – September 2013 all the way through November of 2013. Finally breaking above it, and then began using the top of the first orange box as support for a new area of congestion or a range.
Support there within the upper-1.6200s, around 1.6300. Top of the first green box. Bottom of the second orange box. And we’re looking at resistance all the way up here into the upper-1.6500s, towards 1.6600. And for the life of this, it went between November of 2013 and, over the recent weeks, we’ve seen a final breakout again here into February, where we have broken above that.
So we see a familiar pattern. Ranging between here, breaking out, ranging between here, and now breaking out in the direction of the longer-term trend. Now, over the past several days, we’ve seen the market now finding resistance here into the upper-1.6700s, low-1.6800s. The green-shaded area at the very top of the chart. And now finding support on top of the second orange box, into the green-shaded area, into the 1.6600s. So, we see a familiar pattern taking shape, where we went into a range here, broke out. Went into a range here, and broke out of there. And now we’re going into a bit of a range again, finding resistance and support.
It’s interesting just observing these three orange-shaded areas. The first one a bit wider. The second one a bit narrower. And the third one now a little bit narrow as we see it right now. Now, it could widen out again and go a little bit higher like we saw right here, but for the time being we’re finding support right around the upper-1.6500s, towards 1.6600, and resistance into the 1.6800 for the GBPUSD.
Let’s go ahead and zoom it in here on the Daily Chart. We could see all three of those zones a little bit closer. So we see that familiar pattern. So, for the day today and really for the time being, until we see a change of this pattern, I would expect support into the upper-1.6500s, towards the 1.6600-level. As long as it stays above this center green-shaded area between the last two orange boxes, then we expect support and the potential is that it rallies all the way back to the highest high. And the potential is because that’s what historically we have been doing over the past several months here for the GBPUSD.
Now, all of that will change if we break underneath this green-shaded area and get back underneath this highlighted zone. Get back underneath the 1.6600-level. That changes the pattern of the trend, but that’s the pattern we’ve been observing over the past several weeks. If you’re looking for a sell scenario, if you think, “Well, the trend could be changing and we’re looking for a sell here,” I don’t think this is your best opportunity to sell. We’re running into support. The pattern of the trend continues to play out. This is not a good opportunity to sell it because you’re running into this potential barrier that could see the market turn back in the direction of the trend.
If you’re looking to sell it, it actually becomes a much better opportunity as it rallies back into higher resistance, all the way back up here into the mid to upper-1.6700s. The other side of that: of course we could sell this if it breaks underneath the 1.6600-level and this green-shaded area. So, for the day today, I believe it’s more likely that we could be looking for buy scenarios on dips towards the 1.6600 or even into the upper-1.6500s for the GBPUSD today.
I’ve also taken some Fibonacci retracement measurements. I’ve taken longer ranges from the low to the high of the red trend here, from the lowest low on the chart to the highest high. Also, from the low right here where the two red and blue trend lines connect, around the 1.6250-level, to the current highest high. And we see some overlap of fib right here at the top of the green-shaded area. Very interesting there. Next overlapping fib from the top of the green-shaded area would be back down here into the yellow-shaded area, where the blue and the red trend lines connect. There’s some overlapping fib there also. That would give us a clue to where our next support is.
Let’s go ahead and put an arrow there. Here’s our next support into the yellow-shaded area. And of course, long-term, resistance seen all the way up here at the top. Now, we do have a couple areas here that I want to highlight when we get down to the smaller compression – the 4-Hour. The yellow and the purple-shaded area up here could be some intermediate resistance on the way back higher.
Let’s go ahead and go down to the 4-Hour Chart. And there’s that little dip back down. There’s the continuation of the daily pattern that we saw. Staying within our orange-shaded area, between the green-shaded areas, finding support above 1.6600. Let’s go ahead and bring our arrows over here where we can see them again. Let me zoom out one time so we could see these a little bit better. There’s our bullish arrow. There’s our bearish arrow. Above the green zone, we look for support. Below it, we look for a fall back down towards the yellow zone down here. And of course there’s our upper resistance up here.
Now we can zoom it in a little bit. Yellow and purple-shaded areas here. We could see that right now the purple-shaded area holding as some resistance. Above that, we’ll go back to the yellow zone, where we’ve seen some historical resistance. Over the past few days, we’ve seen bank flow levels continually going down. As you can see them right here, they were moving in a downward direction. I would expect today we will see the bank flow in a very similar area that they were last week. Right here around the yellow-shaded area. Maybe just a hair lower. Underneath the yellow-shaded area. Underneath the 1.6700-level could be some resistance right now, but just be aware that we’re running into major support here for the GBPUSD.
As long as we stay above 1.6600, I think we’re looking for support and the potential to rally back in the direction of the longer-term trend. Only if we break underneath here do I expect it will begin going back down again. If you’re looking for sells into resistance, some intraday selling opportunities could be here at the purple-shaded area. Just be cautious because, if it breaks above there, you’re likely looking for it to the next resistance, which will be the yellow-shaded area. So, we’re looking from 1.6650 in the purple zone to 1.6700 in the yellow zone. And beyond that, we’re all the way back up towards 1.6800 and the top green-shaded area. Selling right now discouraged because we’re running into that major barrier of support. But only if it rallies back in towards resistance would I look for sells. More likely looking for support and buying opportunities for the GBPUSD today.
