GBP-USD Daily - Head and Shoulders idea using trend lines

Trend lines, Harmonic and other common patterns combined with Fibonacci levels are very powerful in identifying price action and they do have a great influence on price or at least give a reasonable direction of the price. If they are used with support/resistance levels in real time trading, it then becomes a high probability system for traders to make good gains.

In this idea, I have used trend lines to showcase resistances which later became support and vice-versa. Also, the head and shoulders idea that developed over the last few weeks show clear resistance at neckline which coincides with the trend line too. Using Fibonacci retracement to previous high (ignoring the outlier below 0 level, 38.2% area at neckline is proving to be very powerful resistance and when price gets close to that zone soon, there is a strong possibility for the price to start building the right shoulder by dropping to the lower trend line that supported the left shoulder. When the price starts moving up to complete the right shoulder, the price must break the neckline resistance to shoot above. At that completion point, a LONG punt can be taken to maximise gains.

This will be valid only if the daily candle doesn't close above the neckline trend line which is less probable for now and when price starts turning back to start building the right shoulder, it will be a definite SHORT at least till the price hits the lower trend line supporting the shoulders.

If you like this idea, give me a thumbs up. Also have a look at my AI Lite indicator which populates BUY/SELL signals on chart based on a high probability system that I have developed. If you would like to try it for a week, PM me.

Happy trading.

Comment:

Neckline and support breached. Short idea became invalid at resistance as retest of resistance enabled bulls to pierce through 1.33 mark further enabled by DXY down trend.

Comment:

Not support - Resistance (above comment)