Want FULL ACCESS To
ROSS’ DAILY TRADE ROOM?
Simply Click The Get Started Button Right Now!
Transcript of Video
Click Here to receive an email alert when Ross posts a new daily video
I’m going to begin the day today on the Greater British Pound versus the US Dollar [GBPUSD]. I’m going to start today on the Weekly Chart, and I’ve scooted the chart over a little bit so we could see back further in history. First off, down here at the bottom of the chart we found a low back in July of this year and began climbing within an uptrend over the past several months. We have continued to remain in that uptrend, creating higher highs and higher lows. Now, over the past four weeks, now into the fifth week, we could see that the market has gone into a period of resistance and congestion at the top right-hand side of the chart.
We could see it contracting in this congestion. One, two, three, four, and now the fifth week holding underneath the resistance that we see here into the yellow-shaded area at the top of the chart. That goes between 1.6400 and about 1.6440. Now, take that yellow-shaded area and follow it back to the left-hand side of the chart. We’re going back a couple of years, back into 2011, where we look into July and August of 2011. Six weeks holding underneath that yellow-shaded area. And you go back a little bit further into May and June of 2011 and you could see four weeks holding underneath that yellow-shaded area as resistance.
And both of those times, after a period of time, reversed and started going back down and eventually pushing all the way back down into the 1.5200s. Then it started coming back up, back down to the lowest lows, and then, once again, now, here we are back into this yellow-shaded area. So, it’s my expectation that as long as hold underneath that yellow-shaded area, there’s potentially a reversal point here for the trend. The trend has been up for quite some time. There’s potentially a reversal point because this is what history tells us about this price level around or just above the 1.6400-level.
Now, taking in that into context though, we have to realize we are on the Weekly Chart and there could be substantial spikes above that yellow-shaded area before reversing. If you take a look back here on the left, it went from the 1.6400-level all the way up – 150 to 200 pips – into the 1.6500 and 1.6600-level before reversing within those weeks. So, we can’t get too caught up in the fact that it has to stay under there and can’t get above it, because there were multiple pips that were seen spiking above there during those weeks that it returned back down.
So, there is potential for it to spike above it, but what we’ll be watching for is for the continued hold underneath that yellow-shaded area, the 1.6400-level, and the potential for reversal. Now, if it does eventually open and close and break above the yellow-shaded area, we, of course, will look for a continuation of the current uptrend that we’ve been in for the GBPUSD. And let’s go ahead and scoot that back over to current time and now let’s go down into the 4-Hour Chart. Going down here to the 4-Hour Chart, of course there is the current uptrend that we’ve been in since July of this year. And here’s that period now that we’ve been finding resistance under the yellow-shaded area.
Finding resistance into the yellow-shaded area, we did see, for the most part, over the past several weeks, we’ve seen this purple-shaded area be very significant, and that goes between the 1.6330s and 1.6360-level. We’ll look at that in more detail on the 4-Hour Chart. The purple-shaded area just underneath the yellow-shaded area, and then all the way underneath that we look down here into the orange-shaded area. That goes down into the 1.6240s, down to 1.6215. That’s the orange-shaded area.
So, the top three-shaded areas are what we’re looking at. Let’s go ahead and zoom this in a little bit, so we could see this a little bit more. Specifically I want to look at the orange-shaded area first. You look back to the left-hand side. You see resistance on the left. That’s helping offer some support right now. So, at least, at this point, the trend line from the longer-term trend and those historical resistance. And we also have some Fibonacci here. The 1.6242-level is the .382 fib of this most recent trend leg. From the lowest low that you see here on the daily view to the highest high, .382 sits at 1.6242. That’s the top of the orange-shaded area and these last resistance highs, and that comes right there into that orange zone.
So, as long as we stay above there, potential to bounce and go back up within the direction of the overall long-term trend. If, at any point, we break underneath that orange-shaded area and that blue trend line, that could be a signal that we’re changing the overall trend for this pair from an uptrend back down into a downtrend. But we are in a period of congestion. Right now, again, as we started looking at on the Weekly Chart, the yellow-shaded area is our significant resistance. Any push above there – open and close, which we haven’t seen over the past four weeks. Any open and close above this yellow-shaded area likely looking for a continuation higher into the 1.6500 or 1.6600s for the GBPUSD.
As long as it stays underneath it, potential to continue to be in this congestion and bounce back down. Now, I said we’d look at it on the 4-Hour Chart, but we can see that in some detail here on the Daily Chart. The purple-shaded area obviously over the past several days, we have found some support there into that purple-shaded area. As long as it holds within or above it, potential to make those rallies back to the yellow-shaded area. If, at any point, we see a push underneath that purple-shaded area, we’ll likely look for the continuation back down into the orange-shaded area, into the mid to low-1.6200s.
Incidentally, taking one last look at Fibonacci here on the Daily Chart before going down to the 4-Hour, same fib, lowest low at the bottom of the chart to the highest high. Taking that Fibonacci range, we see the .236 fib sitting at 1.6334. That happens to be the bottom of the purple-shaded area. So, that’s where we’re currently finding our support and of course, like I said, the .382 sits down here into 1.6242 – the orange-shaded area. We do have a green trend bar with the Forex Black Book today, so we’ll definitely want to be aware of that. If that holds true and we see a continuation of the uptrend, we’ll be looking for buys on dips into support; become our best opportunity. I think down there into the orange-shaded area and into the blue trend line becomes the very best opportunity to look for a new buy for the GBPUSD.
Let’s take this information down to the 4-Hour Chart and get some more detail here. It really doesn’t change any of the outlook that we were just looking at on the larger compressions, the Weekly or the Daily Chart. We take the purple-shaded area. We know that as long as it holds within it or above it, we could see some rallies back higher. And so far that’s what we’re seeing today and over the past several hours. We’ve seen the market hold above the 1.6334 Fibonacci and now making a rally back higher. Resistance of course will be seen here into the 1.6400 to 1.6440. That’s the yellow-shaded area. We also see that over the past three days – three trading days – our bank flow levels are sitting here surrounding top down to the bottom of the yellow-shaded area, giving us a higher clue or higher potential confidence in the sell side, looking at resistance into that yellow-shaded area.
So, if those bank flow levels come out again today into the same generalized zone, into the yellow zone, then again it gives us higher confidence in resistance and the possibility of this turning back down. Underneath the .236 fib, underneath the purple-shaded area, a clear open and close, which we have not seen obviously here. We’ve seen several attempts. Spikes underneath it, but no open and close. What I’m looking for is an open and close underneath the 1.6334. I’d begin looking for it to challenge all the way back down here into the mid to low-1.6200s. So, selling underneath the purple zone becomes an opportunity to target back down to the orange-shaded area. Then, once it reaches down here into the orange zone, we can begin looking for new buys in the direction of the trend for the GBPUSD this week.
