Good morning traders,
The USDX support bounce that we’ve been seeing has allowed the majors to all pull back from their highs.
GBP/USD is one such pair that has pulled back following the latest round of US Dollar strength and there are some quality levels on offer for savvy traders. Let’s take a look at some of them here below, starting with the weekly:
As you can see on the higher time frame chart, we have a very obvious bearish trend line sloping down from the highs in 2014. I’ve chosen to draw the line by connecting the first two touches, but there are literally 10+ ways you could draw it and they’d all give you very different results.
The fact that there is a lot of spikes and the whole Brexit shenanigans (oh yeah, remember that thing?) thrown up in the middle of the trend, I have chosen to treat resistance here as more of a zone rather than a hard level.
If you’re a reader of this blog then you know that I preach the fact that higher time frame trend lines are very subjective. This is because the slightest difference in how you’ve drawn the line, can literally mean hundreds of pips difference once you zoom in. This particular line is the perfect example of that subjectiveness.
With price sitting right on top of trend line resistance on the weekly, I’m taking the view that the level has not yet broken out, and our trading bias should be to the downside.
After zooming into an intraday chart, you can see we have a classic rising wedge pattern. We have the counter-trend buying that the textbook tells us to look out for and now price is coming off it’s highs which co-incides with the weekly trend line.
With that higher time frame confluence, I’ve drawn some short term support levels that we can look to sell into if any subsequent rallies start to show signs of weakness.
Best of probabilities to you!
Dane Williams – @VantageFX
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