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Convergence of Indicators
Often times, when you can identify a level, where multiple indicators point to a certain outcome there can be a higher probability of that outcome, which is the case of the GBPUSD today.
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This morning we can see at 1.6235/40 that there are 4 different indicators pointing to a price barrier, or what I like to refer to as a wall. First the trend line from the former uptrend, connecting previous lows aligns with 1.6235. Second the Fib retracement levels from that same range show a .618 at 1.6240. Third, looking into the past on March 18th there is former resistance, which often leads to current support. And lastly, the Tunnel Indicator shows the main Tunnel at 1.6235. All of these indicators line up to identify a significant decision point.
There are two possible outcomes at a point like this:
The first expectation is that there could be a bounce back in the opposite direction to go back up in the direction of the former trend, a bounce off of the trend line, Fib retracement level, Tunnel and Support. In this case you would look to buy.
The second expectation is that there could be a break that could signal a continued fall in the direction of the current momentum. A break would be identified by a full open and close under the price level. In this case if the break is identified you could look to sell.
I have chosen the first option, buy and look for the bounce back up. My stops are placed just below the next obvious technical level around 1.6185. That way if a break does occur my loss will be minimal and I will begin to shift my focus.
