Today on GBPUSD – Daily and H4 charts support Short trades.

On the Daily chart above, price struggled to continue its upward move yesterday, and it closed with a doji candle formation. The doji gave a signal of possible price reversal downward – especially since it formed around the 1.6440 area, which, although offered no distinct high or low, is congested with previous support and resistance levels. To buttress our bearish bias, price recently broke below previous day low @ 1.6355. The critical support trend-line is still hundreds of pips below the current price level, hence – barring any intense price volatility – we can still conveniently seek a Short trade set-up on the hourly chart, as long as the H4 charts supports a Short trade.

On the H4 chart above, price has broken the most recent swing low @ 1.6355 (which we’ve highlighted using the blue broken line) downward. As we’ve probably observed, this swing low @ 1.6355, coincidentally, is also the previous day low. From a day-trade perspective, this is a good sign supporting a Short trade. The white horizontal line @ 1.6481 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the hourly retracement. It might happen, and it might not.