The GBP/USD suffered further losses yesterday, following a H4 rotation from the mid-way resistance 1.3350. Wednesday’s low 1.3318 was quickly taken out, allowing cable to breach and eventually close beyond the 1.33 handle by the day’s end.
Before we discuss possible setups in this market, let’s take a look at the overall picture. Looking up to the weekly chart, sellers are in the process of stamping in a clear bearish selling wick just ahead of a long-term resistance area at 1.3501-1.3804. Despite this, a quick scan on the daily chart shows that the buyers and sellers are currently battling for position within the lower limits of a demand zone chalked up at 1.3371-1.3279.
Our suggestions: Given the above notes, here is what we have logged going forward:
• Although price is currently finding support off the top edge of a H4 support area at 1.3290-1.3242, we would not consider this bullish since there is not only a far more attractive zone just below between the lower edge of the current H4 support area and a H4 support level drawn from 1.3261, but price also has to contend with the 1.33 band. Bolstered by a H4 AB=CD completion point at 1.3254, a H4 mid-way support 1.3250 and a H4 50.0% Fib support seen around the 1.3250 region, the above noted H4 buy area is likely to bounce prices. However, seeing as how the present H4 support area is positioned slightly below the current daily demand zone, and what with weekly action painting a rather bearish picture right now, we would only consider the above H4 buy zone as valid on the basis of a lower timeframe confirming buy signal. What we look for is either an engulf of supply followed by a retest, a trendline break/retest or simply a collection of well-defined buying tails around the higher-timeframe buy zone.
• Should the above said H4 support area be taken out, nevertheless, short trades on the retest of this boundary down to at least the 1.32 number, followed closely by H4 support at 1.3174 is also something we have our eye on today.
Before we discuss possible setups in this market, let’s take a look at the overall picture. Looking up to the weekly chart, sellers are in the process of stamping in a clear bearish selling wick just ahead of a long-term resistance area at 1.3501-1.3804. Despite this, a quick scan on the daily chart shows that the buyers and sellers are currently battling for position within the lower limits of a demand zone chalked up at 1.3371-1.3279.
Our suggestions: Given the above notes, here is what we have logged going forward:
• Although price is currently finding support off the top edge of a H4 support area at 1.3290-1.3242, we would not consider this bullish since there is not only a far more attractive zone just below between the lower edge of the current H4 support area and a H4 support level drawn from 1.3261, but price also has to contend with the 1.33 band. Bolstered by a H4 AB=CD completion point at 1.3254, a H4 mid-way support 1.3250 and a H4 50.0% Fib support seen around the 1.3250 region, the above noted H4 buy area is likely to bounce prices. However, seeing as how the present H4 support area is positioned slightly below the current daily demand zone, and what with weekly action painting a rather bearish picture right now, we would only consider the above H4 buy zone as valid on the basis of a lower timeframe confirming buy signal. What we look for is either an engulf of supply followed by a retest, a trendline break/retest or simply a collection of well-defined buying tails around the higher-timeframe buy zone.
• Should the above said H4 support area be taken out, nevertheless, short trades on the retest of this boundary down to at least the 1.32 number, followed closely by H4 support at 1.3174 is also something we have our eye on today.
IC Markets is an online forex broker specialized in providing transparent trading solutions to both retail and institutional investors alike. We provide superior execution technology, lower spreads and unrivaled liquidity.