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I’m going to get started today on the Greater British Pound versus the US Dollar [GBPUSD]. I’m going to start here on the Weekly Chart and, for the past three or four weeks, we’ve been studying this wider range that you see here in the middle of the chart, highlighted by the blue box. You follow it back in time. The green-shaded area at the top of the blue box and the top of the blue box, you could see resistance coming up into the mid to upper-1.6100s.
You go back here, even into 2013. You see a few months where it settled out as resistance into the green-shaded area and the top of the blue box. You go back even further into 2012. You could see resistance again in the top of that green-shaded area, into the mid to upper-1.6100s, even into the mid-1.6200s. The other side of that is at the bottom of the box you could see support down here. Even going back to 2012, you see that support back here on the left-hand side of the chart, bottom of the blue box.
You could see it here again into 2013, late 2013. The few-month period where it found congestion, ranging from the bottom of the blue box to the top of the blue box. And then, again, over here in current time. Same thing. Over the past three, four, five weeks, we’ve been studying this same area as resistance and support, knowing the green-shaded area at the top and the area at the bottom of that blue box has been our support for the past three or four weeks.
Now, right now we happen to be right in the middle of that larger range that we see there. So, for the time being, we’re going to continue to trade that range until something changes with the trending behavior. Of course on the left-hand side of the chart, we see a long-term uptrend. That’s not too hard to see. It was in an uptrend. Went into that period of congestion. Continued the uptrend. Then, over on the right-hand side of the chart, we could see we were in a downtrend. We’re in that period of congestion.
The next thing we’re going to be looking for of course will be a breakout of this range or congestion here for the GBPUSD. Forex Black Book is red. It’s been red for the past couple of weeks, and we’ll likely look for that to continue until we see a breakout of this larger range here for the GBPUSD. Let’s go ahead and take it on down to the Daily Chart. Get a closer viewpoint. Again, our Forex Black Book is still red this week and, in fact, it’s even, today, turned the brighter red color. Gives us a little bit of a bearish expectation, but I don’t think we’re out of the woods yet. We could still see some upward movement and still stay within this range here. The larger range that we see here with the blue box here on the GBPUSD.
Purple-shaded area is kind of that hinge point. If it gets above or stays above the purple zone, we’ll look for the market to continue to pressure back towards the blue trend line and the green zone. Getting back underneath that purple zone, that same hinge point in the market, if it gets back underneath there, we look for it to go back down to the blue or maybe even the orange-shaded area at the bottom of our larger range, the blue box that we studied from the Weekly Chart. We really need to see a breakout of this purple-shaded area, above or below.
Right now 1.6100 able to cap the market for the past couple of days. Going back into last week, 1.6100 being that resistance breakpoint. If it can stay underneath it, then we look for it to go lower. Above 1.6100, we look for it to continue higher. And when I’m looking for a breakout, I’m typically looking for a clear single-candle body to open and close outside an area of congestion. We don’t yet see that here on the Daily Chart for the GBPUSD.
Let’s go ahead and take it on down to the 4-Hour Chart, and here on the 4-Hour Chart, you could see that same, similar area. 1.6100, where the market is challenging above it right now, but I’m not too confident in the breakout quite yet. I of course would like to see a clear body above there. I’m not sure that I would trust this one yet. It’s not quite clear enough above there for me to feel comfortable that that is a clear breakout here.
One other thing that I want to point out here on this 4-Hour Chart is that long-term trend line coming down from the top, and also from Friday. These are Friday’s bank flow levels. And really you go back the past three or four days, where you could see the bank flow levels capping the market, not allowing it to go any higher. So, right now Friday’s levels were right above where the market is, and I really don’t typically want to buy into those sell levels.
These are sell levels or an accumulation of sell orders that we see just above the current market, and I typically don’t want to buy underneath there when we’re very close. I want it to be very far, very similar to what you’d do with the resistance level. If you’re going to buy, you don’t want to be just underneath the resistance. You want it to be very far below that resistance, so you can target those levels as it goes back higher. So, if I was going to target those levels, I’d want it to be much lower, maybe even as deep as this blue-shaded area down here towards the bottom of the chart, but we’re just not there.
So, for the day today, we’re going to look for a clear signal. A clear breakout above 1.6100, we’ll likely look to target back to the bank flow levels, the blue trend line, or maybe even into the green-shaded area all the way up here at the top of the chart. Let’s go ahead and put another arrow there as our next resistance. If we get back underneath the purple zone, if the bearish market takes hold again, we’ll look for it to go all the way back down here to the blue-shaded area for the day today.
Forex Black Book being red, if you’re looking for a new sell signal, of course I’d like it to go higher. I’d like it to go as high as possible. Then give us a red arrow. You could see the last two red arrows we see happen after the market goes up. So, you see the market moving up. Then you see a red arrow. Market moves up. You see a red arrow. So, I need it to go up. I want it to go up even further than we’ve already gone, likely even as high as the green-shaded area. One last thing I want to do here.
Let’s take a trend line. Just a very short trend line and connect the last two highs. Just the last two resistance highs. Remember in a downtrend, what do you want to see the highs doing? You want to see the highs getting lower. You want lower resistance within a downtrend that shows you the price action is consistently going in that direction, and so that’s what we’d look for, and of course that comes closer to where the blue trend line, the bank flow levels, and maybe even as close to the green-shaded area.
Another thing I want to do here is take Fibonacci from the last high we have, where the red trend line and the green-shaded area is, down to the current low. And I know that’s going to be a pretty tight Fibonacci level, but if we can do that, we can see that right now the .618 is holding our resistance. 1.6111 is where the 0.618 of that little downtrend right there sits, and that’s capping our resistance. Clearly a break above that .618 fib, 1.6111, we’re back here into the .786 and .886 fib, which sit right here into the 1.6140s to 1.6160s. That’s where the red trend line comes down. That’s where the blue trend line comes down. That’s where our bank flow levels are and that’s much closer to our last resistance high.
So, if we can make it back into the mid-1.6100s today, that’s where you’re going to look to sell this currency pair in the direction of the trend. And clearly a breakout above the purple zone will take it back there. Otherwise, back underneath 1.6060 or so, under the purple zone, we’ll take it on back down to 1.6000, again, this week for the GBPUSD.