Transcript of Video
Hello everyone, this is today’s video analysis for November 20, 2018. Today we’re taking a look at the Greater British Pound versus the US Dollar [GBPUSD] for today’s trade analysis.
Before I begin the analysis, it’s important for me to recognize the fact that this is a shortened trade week. We have the Thanksgiving holiday coming up on Thursday, which of course as we approach that holiday, people start to take time off. Early in the day tomorrow on Wednesday, people will start to take time off. Liquidity begins to dry up. So, be cautious with your trading. Use appropriate risk strategies of course in all cases.
As we look here at the GBPUSD, there’s been some ups and downs over the past several months. We go through 2018. We started early in the year with a downtrend. Left-hand side. Black trend line. We rallied back higher. Mostly rallying into the 100-period moving average. A little bit above it. Coming back under. Above it. Coming back under. Above it. And we’re back under it right now.
So, we’ve been back and forth for the past several months, rising and falling. Currently, we’re more in that falling phase with the red trend line over on the right-hand side. The question is: will we see it continue to fall, make a new low here for the GBPUSD in the direction of our current momentum that we’ve had in the past couple of weeks? Will it continue to fall, make a new low, or are we ready to reset and rebound a little bit back towards the moving average or higher here for the GBPUSD?
We don’t know. We can’t know. We can’t see the future about what’s going to happen, but we can look at some clues to what is currently happening with the GBPUSD. Let’s go ahead and zoom it in a little bit. And we could see red trend line is more bearish than bullish. Last week, we saw a significant sell off all the way from the 1.3015-level, the green moving average. Top of the long red candle and moved all the way down here into the 1.2700s. So, a significant sell off here last week.
Now, we’ve made a little bit of a pullback. Rebound back into the yellow zone. Historically, this yellow zone – 1.2850 all the way up to 1.2880 – has been support. You could see that right here. Just a little while ago, right before the red candle. Support right here. You go back to the left-hand side. You could see some support there as well. Right here, between this area, you could see some resistance.
So, we know historically, the yellow zone can be an area of significant decision making. Buying, selling, entering, and exiting for the GBPUSD. So, we come back to the past three days. What’s happening? We’re finding resistance here at the yellow-shaded area. So, with that, into resistance, into the most recent momentum, the sell off that we’ve seen for the GBPUSD, this becomes an opportunity. 1.2850, 1.2880 for shorts. Just think. That past three days, if you’d done that, which I did actually yesterday, you’ve seen some profit as it dipped back down. Of course it’s come back up into that yellow zone, but you’ve had opportunities to see profit for the past three days, selling the yellow-shaded area.
So, let’s stay with that. Let’s stick with that. Looking to target back down to, at minimum, the orange-shaded area. Maybe even a deeper push back down to the green zone and the bottom of our overall range that we’ve seen here for the GPBUSD. The risk is pretty simple. The risk right now is that it breaks above the yellow zone, the 1.2880-level, and starts to change the direction once again for the currency pair.
So, I think it’s pretty easy for the day today that we need to focus our attention on shorts. Obviously for the past same three days, buying right now not a good idea because it hasn’t gone anywhere. It hasn’t done anything for the past three days under that yellow-shaded area. So, buying not really part of the agenda until or unless it gets above the yellow zone. And then we shift our agenda a little bit above 1.2880. May buy towards the green zone or higher. But until it gets above the yellow zone, I don’t think buying is even part of the agenda. I think it’s more of a short attitude right now underneath that yellow zone, targeting the orange or the green zone.
Watching of course your risk this week as we have the bank holiday and the shortened trading week this week. You need to be careful with that, but I think all in all, we don’t really want to buy right now. More likely to go short on the GBPUSD this week.
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