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

On the Daily chart above, we concluded last week that price seems to be in a major downward or bearish channel, and the current pattern of lower high and lower low on the Daily chart is buttressing that view. We also identified a Daily swing low @ 1.6261 (which we’ve highlighted using the blue broken line) as a critical support level that the bears must contend with; and in accordance with our expectation, the 1.6261 level proved itself – probably even more than we anticipated. Although, last week trading ended with a big rally, and price sort of resumed the upward move earlier today, all factors supporting our bearish bias are still pretty much in place; hence, we would want to consider the current bullish move as a deep bullish retracement. From a day-trade perspective, our bias still tend toward a downward move, however, we might have to exercise patience as the Hourly Short trade setups – supported by the H4 chart – might take some time to unfold. Consequently, from the standpoint of the current method discussed on this blog, we’re probably done with this pair for this month.

On the H4 chart above, last week, price broke, at that time, the most recent swing low @ 1.6496 (which we’ve highlighted using the blue broken line) downward. That automatically shifted our bias in favor of a downward price move. However, as discussed on the Daily chart, we would observe price is currently rallying, but supported by the overall price movement, we are still sticking with our bearish bias. In other words, we’re considering current price action as only a deep bullish retracement. Again, we might have to exercise patience as the Hourly trade setups might take some time to unfold.
The white horizontal line @ 1.6744 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.