Weekly Timeframe: Things were looking fantastic for the pound at the beginning of the week as the buyers were holding prices nicely above 1.57166, where at which point we were expecting price to hit 1.58934, a weekly support swap level. However, mid-week trading saw aggressive selling enter the market which as a result formed an inverted hanging-man candle. This move has consequently forced prices back down to a weekly demand area coming in at 1.54260-1.56110. Let’s take a look at the lower timeframes to see what we can find.
Daily Timeframe: The selling pressure that was seen last week on Thursday and Friday likely came down to a daily supply area coming in at 1.59438-1.58338, which encapsulates the weekly support swap level mentioned above at 1.58934. For higher prices to be seen on the pound, this area would need to be consumed.
At this point in time the daily timeframe shows that price is trapped between the aforementioned daily supply area, and a daily decision-point demand area coming in at 1.55602-1.56802 (located just within the weekly demand area mentioned above at 1.54260-1.56110).
4hr Timeframe: For anyone who read our previous report on the GBP/USD, you may recall us mentioning that if the 1.57208-1.56297 area failed, we should be prepared for a move south down towards a 4hr support area coming in at 1.55917-1.56299 which as we can all see happened on Friday.
Let’s just recap for a moment. The weekly timeframe is currently trading back around a weekly demand area, while the daily timeframe is showing ranging action, but is also trading around the daily demand area within that range (for levels – see above). So, with that in mind, we are favoring a move higher today and possibly into tomorrow at least up until the 4hr resistance swap area coming in at 1.57208-1.56927 (surrounds the weekly resistance swap level at 1.57166). We already mentioned on Friday to watch for lower-timeframe buying confirmation around 1.56141 within the 4hr support area mentioned above, which to our knowledge has not materialized yet. Therefore, today we’ll be keeping a close eye on the 15/5 minute timeframes to see if we can get an entry long with our first take-profit target being set at 1.56853.
Thats an interesting analysis.
On the weekly chart we see an inverted hanging man. It is also important to look at DXY as we have a hanging man formation on the weekly chart on the dollar. Could this be a signal for correction on the DXY and thus a larger move higher on the GBP (say back to 1.6 or 1.61 levels)?
On the weekly chart we see an inverted hanging man. It is also important to look at DXY as we have a hanging man formation on the weekly chart on the dollar. Could this be a signal for correction on the DXY and thus a larger move higher on the GBP (say back to 1.6 or 1.61 levels)?