Today on GBPUSD – Daily and H4 charts support Short trades, but…

On the Daily chart above, though it’s pretty much obvious that we’re now within a medium term bullish trend, current price actions show we probably have the opportunity to seek Short trades – from a day-trade perspective. Earlier this week, price moved upward to breach, at that time, the most recent swing high @ 1.6842 (which we’ve highlighted using the middle blue broken line) but was unable to stay above it; consequently, it started retracing downward since then. The previous day’s low @ 1.6714 (not highlighted) has been broken downward and that strengthens our day-trade bearish bias. However, price is currently at the lower edge of an upward or bullish channel, and that tells us to be very cautious of Short trades. In case the bears decide to disregard the channel’s lower edge, we expect the most recent Daily swing low @ 1.6514 (which we’ve highlighted using the lowest blue broken line) to act as the next crucial support level. In all, from a day-trade perspective, our bias is bearish; but let’s keep in mind that we are still within a medium term bullish trend.

On the H4 chart above, price has broken the most recent swing low @ 1.6754 (which we’ve highlighted using the upper blue broken line) downward. That automatically shifts our bias in favor of a downward price move. The bullish channel discussed on the Daily chart is shown on the H4 chart and it gives us a clearer observation of price action around it. We would observe it’s currently stalling further bearish move. The next crucial support level @ 1.6514 (that we’ve highlighted using the lower blue broken line), which we also discussed on the Daily chart, is also seen on the H4 chart – over 150 pips from current price position.
Depending on individuals’ risk-tolerance level, we might handle the current situation in a couple of ways: either we immediately start seeking Short trade setups, or we wait for an H4 candle to close decisively below the bullish channel. Whatever we decide, again, let’s keep in mind that we are still within a medium term bullish trend.
The white horizontal line @ 1.6845 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.