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I’m going to begin the day today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting here on the Weekly Chart, let’s take a look at some of our key levels for the day today. Often, support and resistance are our main levels to look at. If we take a look on this Weekly Chart, the yellow-shaded area at the very top of the chart, follow it backwards in time and we can see all the way back here, in August of 2011, was the last time we saw the market visit this price level.
This is between the mid-1.6400s, 1.6450 or so, and 1.6500. That’s the top of the yellow-shaded area. And again, the last time we challenged here was all the way back into August of 2011. And of course we could see the current timeframe coming up to challenge that yellow zone over the past few days. Going back in time also along this purple-shaded area, we could see multiple challenges of this purple-shaded area as resistance underneath it. We go all the way back here into early 2012, mid 2012, late 2012, and early 2013. And then, of course, in the most recent weeks, we’ve seen the market challenge underneath that purple-shaded area. And currently, the market has now broken above that purple-shaded area.
So we see it above the purple zone and below the yellow zone. So the yellow-shaded area is our current resistance, purple-shaded area is our current support, and we can see that historically back in time as an accurate representation of these two boundaries or barriers – the support and resistance for the GBPUSD.
Take that information down to the Daily Chart. And as we get down here to the Daily Chart, it comes into view a little bit clearer. We could see the yellow zone at the top of the chart, the purple zone just underneath it, and the fact is over the past week or so, over the past several days, we have seen the market holding as resistance underneath the yellow-shaded area and support above the purple-shaded area. It’s been bouncing around in there for the past several days. What we’re going to need to see is a breakout.
Now, a trending breakout in the direction of the trend would be of course a break above the yellow-shaded area and a continuation of the uptrend that we’re seeing here. A breakout below the purple-shaded area could be our first clue to a potential trend change for this currency pair to start going back down again. So that’s what we’re going to watch for today. A breakout below the purple zone to go lower. Above the yellow-shaded area likely looking for it to go back up again.
Let’s go ahead and take this down towards the 4-Hour Chart. And as we get down here to the 4-Hour Chart, again, it becomes a little bit clearer, as we see where the purple-shaded area is and the yellow-shaded area is in relation to the current market price, which sits right here into the 1.6350-level. Now, any dips into that purple-shaded area and support found within that purple zone between 1.6230 and 1.6290 could offer some support inside that purple zone for a bounce back up. So, what we need to see if we’re going to see a break lower and a change of the trend pattern is a push underneath that purple-shaded area as we look for it to go back down towards the green zone, the blue trend line, or even lower as we look for a change in the trend. But staying within here does provide support and potential buying opportunities for this to go back up in the direction of the previous trend.
Yellow-shaded area of course is resistance. We’ve seen that holding as resistance over the past several days. As long as it holds within or under that yellow-shaded area, there is potential for a bounce back down and that reversal for the GBPUSD. And of course, a break above the yellow-shaded area, we’ll likely look for it to continue to pressure higher. Now, of course, I’ve taken Fibonacci from the low that we see here on the 4-Hour Chart where the black X is, down here at the bottom of the chart. Taking Fibonacci measurements from that low to the current high puts the .236 fib right at 1.6301. Again, that’s where we’re currently finding support – just on top of that purple-shaded area.
The .382 Fibonacci retracement level of that same range sits right here at 1.6215, so we could see that just at the bottom of that purple zone. So, there is some clear evidence of support. The purple-shaded area, historical resistance now acting as support. We see Fibonacci holding there as support also. So, clear evidence of support. If you have already taken buys close to the 1.6300-level on this last spike into that support, you’re protecting profit, looking for the challenge back towards the 1.6400s. And of course, a break above the yellow zone, a continuation of the uptrend.
If you’re looking to buy it, I would suspect that your best lowest risk, highest reward opportunity to buy it is closer towards the purple or maybe all the way down here into the green zone. Now, on the other side, if you’re considering trading a reversal or looking for this to go back down, of course your lowest risk, highest reward opportunity to sell this would be a rally back into the yellow-shaded area, all the way up into the mid-1.6400s, and we’re quite a ways from that right now, or a break underneath these supports and underneath the purple-shaded area does likely become a potential selling opportunity for the GBPUSD.
Now, of course, we have seen the bank flow levels pressuring the market lower every day this week. We could see them pushing the market down. If today’s bank flow levels come out in a similar area as we have seen over the past three or four days or so, then we could be looking for some more pressure for this to go down. If they dramatically change and push well above the yellow-shaded area, it could be our first signal that we’re looking for this to go back up again. So, we’ll watch for those bank flow levels to be published later on today.
So, looking for our lowest risk, highest reward opportunities today. If you’re looking to buy it, dips into the purple or maybe even the green-shaded area become your lowest risk opportunities to buy it. If you’re looking to sell it, a challenge of the yellow-shaded area becomes your lowest risk opportunity to sell it. Be watchful though for a breakout above this yellow-shaded area and above the 1.6500-level will likely be a continuation of the uptrend for the GBPUSD today.
Let’s take one last indicator. Let’s use this trend line here. Putting this trend line right here, we could see the market challenging around that trend line right now. It’s a little bit underneath it, so could be a next clue that we could be looking for this to push a little bit lower, at least back to the purple zone or into the green-shaded area. And the longer-term trend line, the blue trend line that sits down there, closer towards the mid-1.6100s. So, definitely something interesting here. If it stays underneath here, we could be looking for it to go back lower. Of course a break back above that red trend line, likely looking for the turn back towards the higher highs into the yellow-shaded area for the GBPUSD today.
