Transcript of Video
Hello everyone, this is today’s video analysis for November 6, 2018. Today we’re looking at the Greater British Pound versus the US Dollar [GBPUSD] for today’s trade analysis.
Starting here on the daily timeframe, I want to point you out to something very interesting, is the 100-period simple moving average coming here into the chart. The green, wavy line you see here on the chart. We also see that the current market is attempting to break through that 100-period moving average at the current time. So, you could see where it comes from.
Let’s go ahead and zoom it in and there it is, sitting here just underneath today’s current market price. Previous three days, by the way, held resistance right underneath that moving average. Take a look. Three days finding resistance here into the 1.3045-level right into that moving average. Now, today, we see the market challenging above it. So, that same area or same moving average that was for the past three days resistance will help us identify that now as potential support. As long as it’s above it, that becomes potential support.
We also have taken Fibonacci measurement from the high. Top of the black trend line. The high just before the top of the black trend line to the low on that same black trend. High to low of that black trend line puts the .618 Fibonacci retracement level at 1.3040. By the way, that’s the same place that the 100-period moving average sits. So, very interesting there.
Historically, we know that this area into the low to mid-1.3000s, 1.3015 to 1.3045 is the purple zone. You take it back to the left. You could see some resistance way back here on the left-hand side into that same area. So, we know historical resistance offers a clue to future support. We know the 100-period moving average is here and we now know that the .618 Fibonacci retracement level of the black trend sits right there into that same area.
So, three days have found resistance there. That same area now becomes our support. The risk in this scenario is that the market turns around and gets back underneath all of that, underneath the purple zone and goes back down. So, we know that if we’re going to take a buy, to get our lowest degree of risk, which our stop loss now is going to be underneath the purple zone. If we decide to take a buy or long shot here on the GBPUSD, stop loss underneath it. So, how do you get your best risk-reward?
Well, you take a risk or you buy it on a dip into that support. You want to buy as close as possible to this area, 1.3500 or so, so you can have better risk. Lower risk. Smaller stop loss and better reward because right now your next target level would be the blue zone, 1.3110 or the orange zone up here at the 1.3210-level. So, we know where our target levels are. The blue and the orange zone. We know the risk is it gets back under the purple zone. So, buying on any dips to the purple zone becomes our main focus for the day today, knowing the risk is it gets back underneath.
Right now the market is mostly bullish here for the GBPUSD and that’s the direction we’ll focus our attention on at the time being. Of course what we need to see is the USD sell off further. It’s been finding support over the past couple of days. We need the USD to sell off further for this to go up. But the main focus here is if we’re going to trade it, if we’re going to buy it, we want to do it as close as possible to the purple 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.