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I’m going to get started today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting here on the Daily Chart, I’ve scooted the chart over so we could see the entire length of this blue trend line. We’re just seeing the current market price over here on the right-hand side of the chart, and we could see, going all the way back into November of 2013, we began this uptrend. We see higher highs and higher lows.
The trend actually extends further back than November, but this is where our trend line starts. From November, we see higher highs and higher lows continuing to pressure up to the current market price. Going back to our regular view here, where we could see that current market price a little bit better, we could see recently we have broken underneath that blue trend line, where previously we were holding above it, higher highs and higher lows, now we’ve pushed underneath it.
So, we see a little bit of a change of the trend pattern. That higher highs and higher lows now turns into lower highs and lower lows. Lower highs started all the way up here at the highest point of the trend. Just underneath the 1.7000-level, we started falling back down into the the 1.6700s, a rally, which capped out right here into or just right around the 1.6900-level, making a new lower high. A break under the blue trend line, a break underneath this last low gives us a new lower low. So we see a change of the trend pattern.
Higher highs and higher lows previously. Now we’re starting to see lower highs and lower lows. If that continues, we look for the continuation of a downtrend. Also, Forex Black Book at the bottom of the chart implying a bearish bias, a downtrend bias with the red trend bar at the very bottom. So, two indicators showing us that there’s potential more downtrend here available here for the GBPUSD.
So, what do we do with that? We look for selling opportunities within the direction of the trend. Selling opportunities are really two-fold. We look for selling on rallies into resistance or breaks of support. First off, let’s identify the support. The yellow-shaded area, the bottom of this yellow-shaded area is 1.6700. And so far, for the past two days, including today would be three days, we have found support just above 1.6700. As long as it holds above it, potential to bounce back up and make a retracement back in the opposite direction of our downtrend that we’re now studying.
Retracements back higher take it back into resistance. I think there is potential resistance here at 1.6735. The top of the yellow zone. We’ve already seen that over the past day or so. We follow it back in time, along that yellow-shaded area, you could see historical support here. You could see even resistance going all the way back here into March and February. Resistance into that yellow zone. Resistance back here. Support here. Could help us identify 1.6735 as our current intraday resistance. Anything above that, we likely turn back towards the underneath side of the trend line and the green-shaded area, which also identifies historical support right here, and here, and even some resistance back here, along that green-shaded area.
Underneath 1.6700 and underneath the yellow zone, our next targets lower would be back down here towards the purple-shaded area. I have a couple of fibs drawn here on the chart. Previous uptrend fibs. We can see we’re holding underneath a couple of those fibs right now. The blue lines that are in the yellow zone. We’re just underneath that or just challenging it right now. The next fib higher would be back into the green-shaded area, the .382 of the shorter range. The next fib lower would be the .618 of the shorter leg of the Fibonacci retracement measurements, down here towards the purple zone.
So, we see, right now, Fibonacci helping us identify the green zone as resistance, the yellow zone as our current area of congestion, and the purple zone as our next area of support. Let’s go ahead and take all of that information down to the 4-Hour Chart. And as we get down here, we could see, over the past couple of days, we’ve been just kind of stuck in congestion inside this yellow-shaded area. 1.6735 capping the market right now. 1.6700 bottoming the market.
So, what we’re going to look for today – I’m just going to squeeze this in just a little bit so we can see all three of those areas: the green, yellow, and purple. Let’s put a couple arrows here. We obviously know that right now, if it breaks underneath the yellow-shaded area and 1.6700, we’ll look for the continuation of the downtrend. If, for whatever reason, we see an open and close, breakout above 1.6735, our next resistance, which we’ve just identified, would be the green-shaded area. The green-shaded area is our next resistance. That’s underneath the blue trend line, the green-shaded area, historical support back here.
That also happens to be where our bank flow levels for the past couple of days have settled out, right into the 1.6760s, 1.6770s, and 1.6780s. Bank flow levels here. So, any rallies to the bank flow levels, the green-shaded area, and the blue trend line become a selling opportunity. That’s if it makes it that high. It may not even do that if it can’t get through 1.6735. The other opportunity of course to sell it would be a break of the yellow zone. I’m only looking for sells.
I’m not looking for buys here on this currency pair. Buys of course potential above the yellow zone, but I don’t think that’s really the direction we want to focus on given the state of the Forex Black Book and the break of the blue trend line. Selling underneath the 1.6700-level takes us back down towards the purple-shaded area, the next fib down, and that is 1.6660.
A couple of other things I want to do just to give us an idea of what the shorter fibs are, real quick here, let’s take a fib from this current resistance high here in the middle of the chart, down to the current low. That puts the .236 at 1.6745. That’s our current resistance. The .382 of that same range sits at 1.6779. That’s right here inside the green-shaded area. So, confirming resistance there and a continuation lower, back down towards the purple-shaded area.
One other fib I want to do. I want to go from the highest high on the chart, all the way up here at the highest high. Yellow-shaded area at the top of the chart, down to the yellow-shaded area at the bottom, which is our current support low. In doing that, very interesting is that the .236 fib of that longer leg sits right here at the bottom of the green zone. So, confirming everything that we’ve just talked about, green zone is our next resistance if we break 1.6735. If we can’t break 1.6735, we’re back down to 1.6700. Under 1.6700, we’re all the way back down here towards the purple-shaded area at 1.6660 as our next target.
If, for whatever reason, you’re considering a buy opportunity, which is not what I would be expecting, you’re looking for a dip all the way back to the purple zone, maybe a break of 1.6735, but of course clearly a break of the green zone and the blue trend line, we look for the return of the uptrend. But right now focused on the sell side, selling rallies into resistance and breaks of support for the GBPUSD today.
