Transcript of Video
Hello everyone, this is today’s video analysis for January 28, 2019. Today we’re going to take a look at the Greater British Pound versus the US Dollar [GBPUSD] for today’s trade analysis.
Starting here on the daily timeframe, we could see the currency pair has been rising or in an uptrend over the past several weeks. Rising from the bottom of the red trend line all the way down here into the mid to upper-1.2400s and now pressuring all the way into the 1.3200-level at the top of the trend. Been rising and moving higher.
Of course we’ve had risk over the past month or so. Brexit news has caused significant volatility here on this currency pair. Other factors such as the USD have caused pressure on this currency pair over the past several weeks. So, there’s a lot of things that are in play that can cause significant volatility and pressure in the opposite direction that the market is going in.
You could see a couple of times where we see these long wicks sticking lower, or this long wick sticking lower, but then turning around and returning back to the trend. You can even see this fall right here. Significant red candle or bearish move, and then found support and started moving back up. But the overall picture is significantly bullish, and I don’t think we can ignore that.
In fact, last week, we didn’t ignore that. We took a long just around the 1.3045-level, the purple-shaded area here. As the market broke through the purple zone, 1.3045, 1.3015, we took a long and are enjoying some profit as it pressured all the way up into the 1.3210-level, the orange-shaded area. What’s important about that is we’re seeing something very similar. Right now the market is holding above 1.3140, 1.3110, the blue-shaded area in a similar way that it held above the purple zone.
It’ll make more sense again as we get down to the four-hour timeframe, but I just wanted you to see how we’re above the purple zone. It went higher. Above the blue zone, potential that it continues to go up. The risk here is that it gets back under the blue zone, 1.3110. Follow it back in time. Take a look at this blue circle. You see what happened here. The market came up, tested it, challenged it, couldn’t break back above the blue zone, and returned to the downtrend.
So, this is very interesting because we’re seeing something somewhat different this time, aren’t we, where instead of holding here and turning around, we’ve actually gotten through there and are sitting on top of it as support. And that’s important for the day. We still need to see the day, the current little red candle right here stay above the blue zone. If that can happen, then our confidence increases that we look for the continuation of the rising trend.
Zoom it in just a little bit here and really it’s kind of what we’re looking for, is similar to what happened right here with this black circle, where we see the market stay above the purple zone. That’s what gave us some confidence to dive into the trade last week. A buy above 1.3045, is that we saw the market stay above the purple-shaded area.
Let’s take it down to the four-hour timeframe. And as we get down here, this is that area. This is where we were looking at it last week. Right here, where the black circle is, and we note that as it stayed above the purple zone, it sat down into the purple zone as support. That’s where we had some confidence to take into the long late last week. And of course we’re seeing something similar to that now, and that’s what we do.
That’s what traders do. We look for price action, candlestick setups and structures that imply either a continuation or reversal. That’s why we study charts and indicators, to give us confidence in the next move. Our future trading opportunities are often dictated by how the market responded to a particular situation in the past. And really, most indicators are doing that. Price action is of course one of those things. The candlestick structures.
You talk about head and shoulders pattern or an engulfing candle or a hammer candlestick. Something like that implies a future potential price action, and that’s what we’re looking at here. Black circle shows the push above the purple zone. Dip down to it as support. Continuation of the uptrend, so we’re looking at that similar price action now. So, we’re looking at historical price action to help dictate what we might expect into the future.
We’re looking for support here above the blue-shaded area and a continuation back to the orange zone or even a break of the orange zone and the continuation higher. I’m going to look for some support to develop here. I’m not just going to go ahead and jump right into it at 1.3140, but let’s watch for some support to develop. Maybe sit here for a few hours. Four, eight, 12 hours, and then maybe we look for an infusion of buyers into the market to give us confidence that the buyers are still here and ready to take a long on the GBPUSD this week.
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.