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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 Daily Chart, we can see that the previous trend was up. Along this blue trend line, we saw higher highs and higher lows. As the market climbed from down into the 1.4800-level all the way up to the top into the mid-1.6200s.
Now, over the past several weeks, we’ve seen a little bit of a change of that trend pattern. After hitting the highs of the 1.6250s, two times we could see the market challenging the purple-shaded area at the top here at the beginning of October, a little bit of a dip down, a second challenge here on October 22nd, and now we’ve seen a fall. During this last fall that we’ve seen, we’ve seen a change of the trend pattern.
We, first off, saw the break open and close underneath the blue trend line. That was our first clue to a potential trend change. Then we also saw a new challenge into a recent high, into the green-shaded area, which created a lower high. Remember an uptrend has higher highs and higher lows, and a downtrend will typically have lower highs and lower lows. So, within this red trend line here, we can see new lower highs. Well, to complete that, we need to see new lower lows. And along the bottom red trend line, we can see that, most recently, we’ve seen the market challenge the previous low into this pink-shaded area, pushing a little bit lower down here into the 1.5850s.
Now, we haven’t seen a satisfied break of these lows. And when I’m typically looking for a break, I’m looking for a full candle body open and close underneath that support. So, we did challenge underneath that pink-shaded area with the market price pushing through there, down into the mid-1.5800s, but we did not break underneath it. So, really, to complete this bearish trend pattern and begin a new downtrend, we really need to see the breakout underneath the 1.5900-level and underneath this pink-shaded area.
Today we could see that the market has bounced off that pink-shaded area and our last supports here into the 1.5900-level, and made it right back up into the bearish trend line at the top of this trend channel – this red trend channel that I have here. Connecting the last two highs with this red trend line, that’s where the market is coming in contact with that trend line; right here, into the mid-1.6000s. We’re tapping into the 1.6040 to 1.6050-level as our resistance. Top of this blue-shaded area.
Once again, follow that blue-shaded area back in time; we could see some historical resistance here. We can see some historical resistance here. Some support into this timeframe, around October 7th. We follow the blue-shaded area all the way back to the left-hand side of the chart; we can see some historical support back here on the left. So, there is history around this price level, into the mid-1.6000s. So we’re testing into resistance. We’re testing into this red trend line.
Now, if we take that information down to the 4-Hour Chart, we can also see that I took Fibonacci retracement measurements from our most recent high, or the highest high where it challenged here into the purple-shaded area, down to the most recent low, down here at the bottom of the chart, and we can find the 50% retracement level sitting here at 1.6053. And that’s where the market has come to a complete stop on the rise that we saw over the past couple of days, as it continued to push higher, stopped into the 50% retracement level, and along that bearish red trend line within the trend channel.
So, for the day today, as long as we hold underneath that 50% at 1.6053, as long as we hold under this red trend line, I’m looking for resistance as we’ve seen over the past several hours and the potential to turn back down in the direction of the red trend channel. All that will change of course if we see a break above the 1.6050-level. If we see a push, an open and close, above the red trend line, above the blue-shaded area, we’re likely looking for this to push all the way back up into the 1.6100-level and into the green-shaded area. So, we’re at a critical decision point today for the GBPUSD.
I have this highlighted at 1.6035 at the top of the blue zone. And if you take a look back over the past several hours – not just the current blue candle, but the previous red candle, the previous small candle, and between there – you see the last red candle and the last blue candle. All of these current candles right here at the most recent timeframe – the past five four-hour candles; basically twenty hours since yesterday, we have not seen a clear candle body open and close above that blue-shaded area. So, very interesting there.
In fact, I’m going to go ahead and add a quick highlight right here just like this, and I’m going to make it a different color so it’s different than anything else on the viewable chart right now. Let’s make it this orange color right here. And that little orange box right there. That will be our critical decision right there around that red trend line – top of the blue-shaded – and, incidentally, yesterday’s bank flow levels. As long as we stay within or under that orange zone, I’m looking for this to find resistance and start going back down in the direction of the red trend and the red trend channel.
If we see a clear open and close within or above that orange-shaded area, we’re likely looking for a continuation higher. Confirmation of the downward move will be the break underneath this blue-shaded area once again. Then we’re likely looking for the challenge all the way back down here into the pink-shaded area. And of course, as I mentioned, breaking above the orange-shaded area, we’re likely pushing all the way back up here to the green-shaded area. Red trend bar with the Forex Black Book of course is bright red, giving us a bearish trend bias here. So, if we start to see some bearish move, if we start to see a red arrow with the Forex Black Book, that will give us an opportunity to look for a new sell for the GBPUSD today.
