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I’m going to get started today on the Greater British Pound versus the US Dollar [GBPUSD]. Starting here on the Weekly Chart, the first thing I want to look at is the previous uptrend. We’re going from down here at the bottom of the chart, 1.4800 or so, all the way to the top of the chart, back into the 1.7200-level. That’s the previous uptrend. We measure that uptrend with Fibonacci from the low to the high. That puts the .382 or 38% retracement level somewhere right around the 1.6280-level. That’s the top of this green-shaded area, just right around where that horizontal, red line is in the middle of the chart.
And you follow that back in time. That green-shaded area. You can also see historical areas of support and resistance. Over the past few days, we’ve seen it challenging. Actually the past couple of weeks we’ve seen it challenging around that .382 fib, bouncing a little bit below it, a little bit above it, and now this week we could see another attempt to get back underneath it. If it continues to fall in the direction of our current trend, which is this downtrend signified by the blue trend line, the next retracement level is actually the 50% retracement level of this previous uptrend, which sits at the 1.6000-level. That level sits right at the top of the blue-shaded area here in the middle of the chart.
Let’s follow those areas back in time a little bit. The blue-shaded area. You follow it back. You could see evidence of historical support here at the bottom of the red box. You go back to the left-hand side. You could see evidence of support back here. Incidentally, at the top of that red box on the left-hand side you could see major resistance into the green-shaded area, so you could see red box, resistance at the top, support at the bottom, and some congestion in the middle, right around that purple-shaded area.
We’ve seen congestion, support, resistance right in the middle of that red box on the left-hand side. So, we take that information. Resistance in the green zone. Support in the blue zone. Congestion in the purple zone. You take that back over here to the right-hand side. You could see we’re underneath the resistance and we’re falling to the support and congestion in the purple zone, and then again underneath there would be the blue-shaded area for your next area of support. All of that as the market continues to fall into those next levels of support.
Let’s take information down to the Daily Chart, and we could see today that it finally broke underneath that green-shaded area. We’ve been talking about it bouncing around in there for the past couple of days in the Trade Room. It’s finally pushed underneath there, and now challenging back down to the purple zone. Obviously the last time we were here at this purple-shaded area, close to the 1.6100-level, prior to the Scotland vote, we saw support here into this zone, so let’s go ahead and put another arrow right there. This will be our intraday support for the day today.
As long as it holds inside or above that purple zone, like it did over here for a couple of days, we could be looking for support and reversal. So, the closer it gets to this purple zone, like we are right now, would be very discouraging about selling it. Where was the selling opportunity? Well, the selling opportunity was likely all the way back up here into the green zone. We talked about that yesterday in the Trade Room that if you were looking to do anything yesterday, you were likely selling it. And you could go back to yesterday’s Trade Room recording and listen to me talking about this, suggesting that if you were trading the GBPUSD yesterday, it would’ve been selling within or under that green zone, under that blue trend line, and then you would target back down to the purple-shaded area.
Your risk in that scenario would’ve been of course a breakout above that green-shaded area. So, if you took a sell into the green zone, 1.6214, anywhere up above that inside that green-shaded area, you should be in profit protection mode as we’re now falling down into the 1.6130s. If it finds support here again, of course you want to capture as much of that profit as possible. However, if it breaks down through that purple-shaded area, we already know that the 1.6000-level sits down here. That, again, is the 50% retracement level of that previous uptrend, so we’ll want to keep that in mind.
Potential double bottom coming up here. We of course would look for clues to support and reversal to go back up. We don’t obviously have any of that yet, but definitely something to watch for over the next couple of days if we continue to find support into this purple-shaded area. Let’s take that information down to the 4-Hour Chart. And again, as we get down here to the 4-Hour Chart, we already know that the purple zone is going to be support for the day. That’s not too hard to see given the history of this price level between 1.6060 and 1.6115. So, if you’re looking to sell, again, I would be very discouraged about selling right now into this purple-shaded area as it’s likely a barrier of support, as we’ve seen back in time for the GBPUSD.
If you’re looking to buy it, this becomes your opportunity to look for support and reversal opportunities. The selling opportunities, again, were way up here into the green-shaded area. So, I think today you’re looking for support and reversal opportunities. Now clearly a breakout underneath 1.6060, we target back down to 1.6000 here for this currency pair.
Let’s actually take another fib here on the chart. Let’s go from the low on the left-hand side, all the way back here, left-hand side of the chart. From that low, all the way up to the current resistance high. And in doing that, very interesting. We find the .886 Fibonacci retracement level sitting at 1.6105 it looks like. That’s the top of the purple-shaded area. That’s where we’re coming to right now. So, just be very cautious. If you’re selling already, close profit. Protect profit if you sold it from the green zone. If you didn’t sell it, then I don’t suggest selling it right now because you’re running into support or what could be likely a high probability support, so don’t sell it right now.
If you’re looking for anything today, it would be a rally back to the green zone for another selling opportunity or potential support and reversal opportunities here from the purple-shaded area for the GBPUSD. Take a look at the Forex Black Book. It is red. It’s going down. There’s no question it’s going down. Where’s the best opportunities to sell it with the Forex Black Book? That would be back into resistance. So, if I was going to sell using that indicator alone, it has to go up before it would give me another opportunity to sell it anyway.
Take a look at our red arrows. Where do they show up? After rallies higher. Rally higher. Red arrow. Fall. All right, so if you’re looking for a new red arrow with the Forex Black Book, it has to go up first. So, no chance for that today. I think today we’re looking for support right here into the purple-shaded area for the GBPUSD.
