Today on GBPUSD – The Story continues: Daily and H4 charts support Short trades.

Pls NOTE: On the Weekly chart (please refer to Monday, Aug. 10 analysis), the reversal candle that formed around a strong resistance level the penultimate week is still doing a very good job of sustaining our bias for a downward price move.

On the Daily chart above, continuing from where we stopped our analyses early last week; after price broke below the upward trend-line, and MACD crossed below its Signal Line to validate the –ve MACD divergence (that we’ve identified using the red dashed lines on the upper and lower windows of the trading platform), price seems ready to continue its journey southward – as envisaged. The current major price actions confirming the continuation of this downward bias are: First, we would notice price retracement upward was halted around the upward trend-line, which now acts as a resistance area. Second, price has broken the most recent Daily swing low @ 1.6389 (which we’ve highlighted using the lower blue broken line) downward. These signs are simply too strong to ignore: we now have a strong bias to seek Short trade set-ups on the Hourly chart – with the H4 chart support. Except we really know what we’re doing, from a day-trade perspective, it’s very risky to be taking a counter trend trade in an environment as this.

On the H4 chart above, price has broken the most recent swing low @ 1.6483 (which we’ve highlighted using the blue broken line) downward. That automatically signaled the resumption of our bias in favor of a major downward price move. The white horizontal line @ 1.6607 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.