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

On the Daily chart above, yesterday, as anticipated, price continued its downward move. It broke Friday’s low @ 1.6051 and then moved further downward toward the critical support area – the potential support-confluence of a Weekly swing low @ 1.5982 (which we’ve highlighted on the Daily chart using the lower blue broken line) and the lower edge of the “minor” downward or bearish channel (the red channel). However, the bears’ momentum seems to be waning as price, after breaking the 1.6051 level, traveled down only about 20 pips to 1.6027 before moving back upward to close @ 1.6048 – almost the same level with 1.6051. The fact that the above price action occurred at an area very close to the support-confluence of Weekly swing low and channel’s lower edge suggests the bears are already in a bullish zone.
Although, our bias remains bearish from a day-trade perspective, current price actions described above are telling us to take extra caution while seeking Short trade opportunities. Price-break below the previous day’s low @ 1.6027 (not highlighted) would have been a good sign telling us about the bears’ readiness to continue their move, but, due to price’s current proximity to the support-confluence, we are, most likely, already in the bulls’ zone.
In all, our bearish bias remains but current signs tell us to exercise a great deal of caution as we seek to sell this pair.

On the H4 chart above, price has broken the most recent swing low @ 1.6051 (which we’ve highlighted using the blue broken line) downward. That automatically sustains our bias in favor of a downward price move. However, buttressing the observations on the Daily chart, we would observe price is yet to break decisively below the 1.6051 level. That again tells us the bears are most likely within the bulls’ zone – especially when seen in light of price’s proximity to the critical support-confluence of the Weekly swing low @ 1.5982 and the lower edge bearish channel
The white horizontal line @ 1.6248 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, for more aggressive traders, 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.