Transcript of Video
Hello everyone, this is today’s video analysis for December 4, 2018. Today we’re looking at the Greater British Pound versus the US Dollar [GBPUSD] for today’s trade analysis.
I want to start off a little differently today with a bigger picture outlook here for this currency pair. We’re looking at the weekly timeframe here on the GBPUSD. Previously, long-term, we look back a couple of years, going back to the end of 2016, we had a significant uptrend. From a significant multi-year low down here into the low of that candle back there was down into the 1.1900-level, or close to it at least. 1.1900.
Then it took a significant rally over the next couple of years into actually this year. We match up the highs up here into April and May of this year. We capped out at the highs of that blue trend line. And then we started a little bit of retracement, pullback, and we went back down along the black trend line into just a couple of months ago, where we saw the market tag down here into the 1.2700-level. A little bit of bounce back up and a little bit back down.
So, very interesting history for the GBPUSD. What we really want to focus in on is what’s going on over here, is we see two little red trend lines down here. A little blue trend line. Let’s focus in on what’s going on down here. As you could see, over the past couple of months, we’ve come down a few times into these double red trend lines down here. Found support and bounced back up. Here we bounced up and here we bounced up. And here we are again into that same area.
So, the real question is: will we eventually turn and break the double red trend lines, the 1.2700-level, and continue the downtrend, the black trend line, or is this a significant reversal point where we’re going to start looking for the GBPUSD to make a significant rally and start to turn back into an uptrend? So, we’re at a really significant juncture here for the GBPUSD. So, now that we’ve seen that history, let’s go ahead and take it on back down to the daily timeframe.
Same information. There’s the double red trend line. You could see the green-shaded area. 1.2700, 1.2730. Significant support. Bounce here at the bottom of the black trend line. Bounce here. And here we are finding support there again. Today even bouncing off that 1.2730-level again and making its way higher. The blue trend line of course representing our current direction the market has been going in, but we’re challenging that today.
Let’s go ahead and zoom in one more time here. And again, we bounced off the bottom of the green zone. The double red trend line. That black box showing somewhat of a period of congestion this currency pair has been in. The orange-shaded area in the middle. 1.2775, 1.2800 is the top of that orange zone and we’re challenging that today as what has been over the past couple of days resistance and the potential that the market breaks out above the 1.2800-level and the orange-shaded area.
If it breaks the orange zone, we’re also breaking this blue trend line. And again, may be good clues to potential change in direction here for the GBPUSD. We’ve already seen even the Forex Black Book go from red now to green. And we know that when it’s green, there is some momentum shift to go back up, and so that’s very interesting. Shift and momentum to go back up. Challenging the orange zone, 1.2800-level, and the blue trend line. So, I think today there’s no good reason to go short on the GBPUSD.
If anything, we may be looking for an opportunity for a breakout scenario, 1.2800, and targeting back into the yellow zone, 1.2850, 1.2880, or even higher back towards the 100-period moving average into the mid-1.2900s. And if it goes even further, we may see an overall trend change. Obviously there’s going to be several factors that affect this currency pair.
Of course the USD this week has significant news with non-farm payrolls. USD has been on a rally for several months. The question is: will the USD have some sort of weakening or pullback? It started to look like it. We’ll talk more about that in the live Trade Room today. We also have to be aware of course there’s always the concern of Brexit news that could cause significant volatility here as well.
So, throwing all the fundamentals aside for the moment, technically speaking, the real deal is if it breaks 1.2800, I would expect a little bit of a push higher here for the GBPUSD. And if it doesn’t, then we may see it take another turn back to the green zone at the bottom.
Taking it down here to the four-hour real quick before we wrap this up. Take a look here. We’re above the orange zone on the four-hour timeframe. So, if it stays above it, then we’re looking for a breakout scenario. Staying above here, we’ll target back to the yellow zone, 1.2850, 1.2880. And of course above there, look for it to go higher. If it stays above it and you decide to go long and buy, of course your stop loss risk is going to be under the orange zone because once it gets above, you don’t want it to get back below that same zone.
So, if we get that breakout, and we’ll talk more about that in the live Trade Room today, target the yellow zone or higher for the GBPUSD. Risk is now it gets back under the blue trend line, under the orange zone, and goes back down to the green zone for the GBPUSD today.
From Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.