GBP/USD Higher timeframe Analysis

Hello my Name is Frank Dilernia, I'm a Sydney based trader.

I analyse global markets using a number of Timeframes, identfy trends and then wait for the highest probable pattern during the trading week..(not interested in day-trading)

Trends are simply defined by the 50% level within each timeframe.

Below is the GBP-USD....

Expectation currency will make lower lows and head down, with December support disappearing, and January projecting lower...

Friday's pattern of a reversal from the swing lows into the 5-day 50% level is a pattern that often occurs within the Weekly timeframe.

The 5-day 50% level is a trend guide for the Weekly timeframe:- 5 days of trading. This level sets the direction of the Weekly close...

A lower Weekly close will normally try and rotate back upwards next week back into the same level before deciding the direction of the trend...

Current trend is down and likely path to head down to lower levels....

Frank, thanks for the analysis. I'm just learning, just watching, listening and learning. What interest me is your longer term trade style which seems like the best way to go, hopefully less work in the long run. Lets see how this one plays out,take care.

Thanks for Analysis Frank appreciate it. I by the way work for Australian bank Macquarie and do trading on my free time. So what you are stating is that every 5 days the trend reverses?

Obviously Im not Frank but what I understand is that as long as price is below the 5 day 50% (pivot) and below the weekly 50% you use the daily as a trend guide and are only looking to go short.

I have written two books on higher timeframe dynamics, so I’m going to try and explain it in the shortest possible length.


Trends originate around monthly timeframes, the closer it is to the middle of the range it will try and trust outwards to the extreme within that same time period. The direction is determined by what side is price trading in relation to the 50% level. (Support/resistance)

Once it gets to the extremes (support/resistance) it will try and rotate back towards the middle. When the new monthly timeframe begins new levels are formed and this pushes the dynamics of the next timeframe higher or lower than the previous (aka pivots)

Thus when looking that the above chart, the support in December isn’t valid because time has shifted it to lower in January. Therefore we have forward-modelled that GBP could make lower lows during this monthly timeframe, because the monthly timeframe is projecting lower lows.

Look at US index markets and the sell downs this Week. I told others in my report on 30th December, that US markets will sell off this week because of where price was trading in relation to the January 50% levels:- below and in the middle of the Monthly timeframe heading down.

Next Step:-

Have a look at any Weekly timeframe chart, it can be any chart of any index or commodity….. What do you notice?

There is a high probability that price will close away from the open during the 5-days. Therefore we have bottom-to-top or top-to-bottom trading Weeks on most occasions:- approx 72% of the time

Whenever the market closes at its extremes on Friday, it normally will try and rotate back towards the middle of the 5-day range over 2-3 days the following week before resuming the overall trend of the market…

As traders we want to look at Trends, but also look for high probability patterns in the markets so we can maximise reward and minimise Risk:- ( hold the trade as long as possible). We need Generic patterns that everyone can use even though there are hundreds of methods traders use to make trading decisions.



Let’s use an example of a lower Weekly close:- therefore next week we have an expectation that price will try and rotate back towards the middle of the 5-day range.

What happens when it gets there? Because there is an expectation that price is trying to move lower towards January lows…. will the market reverse and follow the overall trend down?

That depends on the past 3-days of trading:- if the past 3-day range is greater than the 5-day 50% level, then the high probability pattern is that price will resume the overall trend DOWN.

If the past 3-day range (high) matches the 5-day 50% level, then there is a greater probability that price will breakout above the range, and the Trading week ends up being a bottom-to-top week, closing higher on Friday….

Trading is simply about support and resistance, and where the trend is trying to take PRICE over TIME.

There are Day-traders, Swing traders, position traders, system traders, discretionary traders, breakout and momentum traders…you name it and there is a trader who fits the bill. But regardless of what trader you are…you are only as good as the method you have developed in relation to the current market conditions. As long as the market remains stable, then traders make money. Once market conditions change the trader begins to experience draw-downs.

That is why I optimise my own trading everyday to factor in changing market conditions everyday, and waiting for the most high probability patterns during the trading week. Even though this is based on GBP, you apply the same with all markets.

Therefore when analysing GBP:- the overall trend is to head down lower during January, but with a lower Weekly open next week, this might not be the case. The Weekly trend has a higher probability of rotating upwards during the first 3-days of the Week before resuming the trend. (Conflicting timeframe pattern)

Matching Timeframe pattern: - is when the monthly trend is defined to move to the extremes, and the Weekly timeframe open is opposite to the Trend: - For example a monthly down trend but the previous Week closes higher, so traders are using the higher open of the Weekly timeframe to trade the 2 day reversal back into the 5-day 50% level, but the Weekly trend continues down into Friday, as it follows the overall down trend.

So as a trader, whatever method we use, the early part of next week is going to favour intra-day traders trading daily dynamic support, it’s not going to favour breakout traders, that might take another 3-days before the next breakout is going to form (break of the 3-day highs or lows). Trend traders might have to wait until price swings upwards to get back into the "down- trend", because selling a lower Weekly open is open to RISK…..

Day traders want to be trading daily as close to daily support as possible, because it is closest to your stop loss point. Even if you are wrong Risk is minimised… (BUYING support)

Even if you use shorter methods of lagging price indicators that many traders use, the method will work best when price is rising upwards off support, or down from resistance.

Hopefully over the next couple of weeks I find some nice trading set-ups during the Weekly timeframe for traders. There have been some nice set-ups these past couple of weeks since my last Thread, but I was sin-binned, so hopefully it won’t happen again…

Frank, I need to read that a couple times to digest it. So as your formula goes, you anticipate a move upwards the first day or two of this week in the area of the 50% level so it can be resoved ? Then your bias is downward.

Let's look at EUR and take an opposite approach...

Below is the EUR/USD Daily chart on the left and intra-day chart on the right.

The price action is opposite to the GBP, it has moved into a trending weekly timeframe closing on its highs as it chases the Weekly ranges, whilst the trend is defined by the 5-day 50% level @ 1.4722

Each trading day rises upwards, but is mostly ‘capped’ around each daily dynamic high range.

A higher Weekly open, supports a rotation back down or into a 2-day stall, however once again the 5-day 50% level will be the trend guide and a breakout of the channel lows and expectation is that price is rotating back down into the Weekly 50% level @ 1.46250….

I hope this helps...

Since my last post, EUR has continued down as part of the 2-day stall reversal, and with the breakout of the lows @ 1.4685

target 1.4625 Weekly 50% level:- high risk to be trading longs below breakout zone on Monday....

GBP/USD moved into Monday support zone @ 1.9658...

trading longs below is open to Risk, over all expectation to move down into January lows, however expectation of a 2-day rotation upwards from these levels...

Partial Exit:- moving stops to trailing stops @ 1.9675

rotation back into the 5-day 50% level (partial exit again), above this and expectation price is heading back towards 3-day highs and exit....

I was late on this one but I like your set up, good job.
I'm ready for shorts though.
Frank, it looks like we had the same set up in the usdchf, I had a few orders long around last weeks low @ 1060. What looks like the 50% area to you ? I closed one @ 1180.

Overall Trend heading down....

Weekly trend defined by the 5-day 50% level

Daily support as shown below....

if trading partial exits around 43 pips and 90 pips from swing points and hold last on Daily trends either way... (same applies on 'shorting')

Because I'm based in Sydney I try and get set only in our day session, I don't do US hours that often....

EUR analysis later......

Frank , I think I have a small feel for what your saying.
Example usdchf price pushed up from weekly low area to 50% @ 1.1189 now awaiting resolvement of this area with a downward bias, am I correct in my thinking ?
L- @ 1060
s- @-1189
s- gbpusd- 1.9757 , now 90 pips what are you saying, that this will be a key level to be resolved ?

You have to analyse from top-down :- higher timeframes into intra-day timeframe... (haven't got CHF infront of me)

let's do EUR....


EUR:- Expectation 2-day stall in an UP trending market.

Trading above all higher timeframe 50% level, except the 5-day.

Daily drops in the forward timeframe favouring another daily 'push down' stalling day.

A 2nd day 'stall' and push down into 'Support'. (risk the 5-day 50% level)

Monday's support shifts lower....

Therefore:- as a day-trader you have certain levels in the market to determine 'risk'...

As a 'Swing-trader' if the trend is going to resume the upwards trend (higher timeframe anaylsis), then I would focus trading longs on the 3rd day, along with using the same levels on Wednesday...

As long as you trade as close to the levels as possibile you are eliminating RISK...

frank, 10-4 on the euro example.

Let's look at forward-modelling GBP/USD... (Intra-day chart of GBP below)

Weekly Trend is down and guided by the 5-day 50% level.

On Wednesday there are rises in the forward timeframe, this often suggets that the current timeframe (Tuesday) will have an UP bias, but that could be limited to around the 5-day 50% level.

What the interesting part is that Wednesday highs drop down, and close the 5-day 50% level.

Therefore;- breakout traders will be looking how prices re-act to the Wednesday highs, because a breakout above would favour a Weekly timeframe that closes higher:- moves higher into Thursday range highs...

Wednesday's highs:- Resistance/ breakout..(trend defined by the 5-day 50%)

GBP/USD has moved up completing another 90 pip high....

This time price is above the 5-day 50% level.... you can leave 1 lot run into another double R90 pip run, or the upper blue channel highs @ 1.9822..

however, I'd be careful trading longs coming down from a .90 pip high and back under the 5-day 50% level on Tuesday, with focus on Wednesday for breakouts...

GBP pushed up into 1.9822 and now stalling....

Expectation of a reversal in the early part of this week back into the 3-day highs....

If this up move would have occured on Wednesday and 'a breakout' of the range I would look for a Weekly timeframe closing higher on Friday...

I would treat GBP, as range bound for the rest of the trading week, as Wednesday's highs are now pushed upwards....

Fascinating work. Thank you for your updates. I am about to re-read the thread to try and answer a few question marks about the method.