GBPCHF - Day traders, Time to take profit!
GBPCHF HOURLY CHART
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This chart is an hourly chart showing today's pivot points. Pivot point "P" represents the true value of GBPCHF for today. Pivot point "S1" and "S2" represents levels of support and pivot points "R1" and "R2" levels of resistance. In a market where there is low volume buying and selling price usually never moves below "S1" and often times never reaches "S1". As long as there is more selling than buying volume price will move downward. This chart shows there was light volume until 9:00AM this morning. At 9:00AM heavy buying volume kicked in with buyers far outnumbering the sellers driving this market up to "S2" where price becomes overbought. It is at this level that the market has made its move for the day. I should say at this point that when price moves down to "S1" and then a candle breaks above "P" and closes at or near its highs it is a good indication buying volume is increasing and we should expect price to move up to "S2". However, once price moves up to "S2" the markets work for the day is done. It is anybody's guess as to what the market will do after that. Sometimes price will continue to stretch higher into overbought territory and sometimes the market will reverse and head back down to test "R1" as new support. Another way of saying this is that risk has increased and there is a good possibility you will be giving up a good part of your profits if you continue to hold a Long position. So far today price has decided to move into overbought territory but the day is not yet done.
In conclusion, when price moves down to "S1" during the day and then reverses directions and moves up to "R2" it is a good time to take profits and anything can happen after that.
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This chart is an hourly chart showing today's pivot points. Pivot point "P" represents the true value of GBPCHF for today. Pivot point "S1" and "S2" represents levels of support and pivot points "R1" and "R2" levels of resistance. In a market where there is low volume buying and selling price usually never moves below "S1" and often times never reaches "S1". As long as there is more selling than buying volume price will move downward. This chart shows there was light volume until 9:00AM this morning. At 9:00AM heavy buying volume kicked in with buyers far outnumbering the sellers driving this market up to "S2" where price becomes overbought. It is at this level that the market has made its move for the day. I should say at this point that when price moves down to "S1" and then a candle breaks above "P" and closes at or near its highs it is a good indication buying volume is increasing and we should expect price to move up to "S2". However, once price moves up to "S2" the markets work for the day is done. It is anybody's guess as to what the market will do after that. Sometimes price will continue to stretch higher into overbought territory and sometimes the market will reverse and head back down to test "R1" as new support. Another way of saying this is that risk has increased and there is a good possibility you will be giving up a good part of your profits if you continue to hold a Long position. So far today price has decided to move into overbought territory but the day is not yet done.
In conclusion, when price moves down to "S1" during the day and then reverses directions and moves up to "R2" it is a good time to take profits and anything can happen after that.
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Normally when a market is in a bullish rally price normally trades between 'S1" and "R2". Once price moves up to "R2" price will either stall for the balance of the trading day or move back downward towards "R1".
Here is the meat! The thing that will drive price above daily pivot point "R2" is an economic news event. Yesterday news was released that a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union in an orderly fashion. This news event is what drove GBPCHF way above daily pivot point "R" yesterday. Like I said in the original post anything can happen once price reaches "R2". When price reaches "R2" I will normally close out my trade and look for a new low risk trade opportunity.