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I’m going to get started today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting on the Daily Chart, I’ve zoomed out so we could see further back in history. We’re going all the way back into July of 2013. Bottom left-hand side of the chart. We began what has ended up being a long-term uptrend.
Through the life of the trend, we’ve seen lots of ups and down, but most importantly, I’ve put a trend line here to represent some of the lows within the uptrend. The blue trend line connects with this low here, into November of 2013. I’ve placed a black X there. You could see here, in the middle of the trend line, another black X right around February of this year. Another third black X right here, right about March 24th of this year, 2014. So, three times challenging into that blue trend line within the life of the uptrend. And most importantly is going up to the top right-hand side. We could see the current market price is underneath that blue trend line.
So, preciously we were finding support on top of the trend line and now we’re finding resistance underneath that trend line. Let’s go ahead and zoom in a little bit so we could see that a little bit better. Here we are now, challenging the past three days as resistance underneath that same blue trend line, which acted as support before, now acting as resistance.
Same area is this pink-shaded area highlighted in pink. 1.6800 up to 1.6835 or so. We follow it back in time. We could see some congestion here. We see resistance back here into April. We see resistance in the pink-shaded area. And even the far left-hand side of that pink-shaded area, you can see one spike high of resistance over here. So, we’ve seen historical resistance right around 1.6800, up to 1.6830s. Resistance in this pink-shaded area before, so we have that, we have the blue trend line, and now we also have the red trend line coming down from the top.
Just like in the uptrend, where we connected supports within the uptrend, I’ve taken a red trend line and connected it with our last two resistance highs that you see at the top left-hand side of the trend, and now the third time coming to challenge that red trend line. So, not only are we challenging underneath side of the blue trend line; we’re also now challenging underneath the bearish red trend line.
Forex Black Book trend bar, over the past several weeks, has been red and it remains red this week, giving us a bearish bias to the trend. So, with the Forex Black Book being red, the fact that we’re under the blue trend line and under the red trend line gives me reason to have an overall bias for the sell side and looking for sells for the GBPUSD. The only reason I would expect to change that outlook would be that it would break above all of this. This entire pink-shaded area, the two trend lines. If it breaks above here, then we’ll likely look for it to continue to pressure higher. So, for the day today, we’re focused in on selling underneath here. The only reason we would change that outlook would be that it goes back up above here.
Selling rallies into resistance will be the main focus, at least for the beginning part of this week, staying underneath this cross section of those two trend lines. Then we take all of that information down to the 4-Hour Chart. And as we get down here to the 4-Hour, we also see last week’s bank flow levels sitting right here into the top of the pink-shaded area. Last week’s bank flow levels. So, I would suspect again today, now that we’ve held underneath the two trend lines and underneath that pink-shaded area, at the beginning of this week we’ll continue to focus our efforts on looking for new bank flow levels in this pink-shaded area, looking for sells on rallies to resistance.
Now, if you aren’t already in a sell, as long as we stay around 1.6800, 1.6830, the pink-shaded area, I think this is a better opportunity to sell it than buy it. We are obviously finding a price ceiling here. There’s no reason to buy it right now. Our buy would be a dip to support or break of resistance. Not a buy into resistance. So, no reason to even consider a buy, at least at the current moment. We’re only looking for sells, looking to target back down here to the green-shaded area, which would be into the mid to upper-1.6700. We’re looking 1.6760 to 1.6785 is the green-shaded area.
So, we’re only looking at about 25 or 20 pips lower from current market price before we run into our first support. Beyond the green zone, of course we challenge back to the yellow zone. Of course beyond the yellow zone, we’d look for a continuation of the downtrend. I think the main focus today should be for selling into this pink-shaded area. One last thing here on the 4-Hour Chart.
I’m going to take Fibonacci from the current high that we see at the top of the chart. Just this last high that we see up here, down to the current lowest low. And in doing that, from the highest high you see on the 4-Hour, down to the current low, this last down trend, we find the .618 Fibonacci retracement level at 1.6830. That’s right at the top of the pink-shaded area. We find the 50% retracement level right at 1.6806. That’s at the bottom of the pink-shaded area. So, now we can see Fibonacci on both the top and the bottom of that pink zone, identifying that as resistance. Staying within or underneath it, selling, looking to target back to the green zone, which is where the .382 of that previous range is. .236 is all the way down here into the mid 1.6700s, towards the yellow-shaded area. Looking for a fall today for the GBPUSD.
