On the Daily chart (attached), since the beginning of last month (August), we’ve been discussing the possibility of the GBPUSD pair experiencing a protracted downward move. Price action throughout the month of August only strengthened our bias. Currently, there’re quite a number of factors working in favor of a sustained price move downward – both fundamental and technical; but our primary focus is on technical factors: We would observe on the Daily chart that price is in a lower-high-lower-low formation; a previous upward trend-line (the red dashed line) that price broke below about a week ago has been acting as a strong resistance area as price retracement upward was halted twice in that area. A more recent upward trend-line (the red solid line – NOT the bold line) is a new area price seems set to break downward; although we won’t be able to ascertain that until price closes, decisively, below it. However, price has broken the previous month low – the most recent Daily swing low @ 1.6152 (which we’ve highlighted using the blue broken line) downward. That’s another very strong indication that the bears are resolved to hold on to their reign. And, last but not least is the previous day low that price has also breached. In all, we have preponderance of factors supporting a continuous downward price movement.
On the H4 chart (attached), price has broken the most recent swing low @ 1.6182 (which we’ve highlighted using the blue broken line) downward. That automatically sustains our bias in favor of a downward price move. The white horizontal line @ 1.6374 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.
However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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Joined Aug 2008
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Status: Surf The Waves
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Hi Tunji,
Once again, great analysis and charts. I am in full agreement and remain bearish as market flow on daily and 4 hour charts are down. Price has now retraced to .50 fib level, which is also a psychological level 1.6250 and through the daily pivot point. In my opinion, price is now in an area where we have a triple confluence of events. I am waiting for further confirmation to sell. Could you clarify for me your final criteria on 1 hour chart when you said price should be making lower highs and lower lows...is that per candle or swing points. Also, at what point would you enter.
Once again, great analysis and charts. I am in full agreement and remain bearish as market flow on daily and 4 hour charts are down. Price has now retraced to .50 fib level, which is also a psychological level 1.6250 and through the daily pivot point. In my opinion, price is now in an area where we have a triple confluence of events. I am waiting for further confirmation to sell. Could you clarify for me your final criteria on 1 hour chart when you said price should be making lower highs and lower lows...is that per candle or swing points....
Ignored
Thanks for your kind words Fxpilot. Price making lower-highs and lower-lows, I believe, is the same as saying the market flow is down. A lower high is a lower swing high, and a lower low is a lower swing low. Hope the explanation is clear enough?
Regarding the method discussed on this thread (which employs Hourly overlapping Fibonaccis, and Hourly lower-highs, lower-lows for Short trades), a Short trade is currently not valid. Using the attached Hourly chart, price has broken the most recent Hourly swing high @ 1.6191 (highlighted with the blue broken line) upward. Besides, price didn’t form a lower-low as it couldn’t break below the then most recent Hourly swing low @ 1.6113 (highlighted with the green dashed line) downward, before it retraced upward.
However, I’ve realized the Daily and H4 charts analyses work with many day-trading methods – as well as some swing-trading methods. But, as I’ve often said, the method discussed on this thread has been limited to just one for the sake of simplicity. In short, based on H4 Fibonacci, pivots, and previous swing highs/lows, a Short trade set-up is currently valid.
There’s currently a Short trade set-up on the USDJPY Hourly chart. I’ll give a top-down analysis – starting with the Daily chart: On the Daily chart (attached), as discussed earlier this week, we could see that the USDJPY pair has been in downward channel formation since the second week of last month (August). Price has been travelling gradually toward the lower edge of the channel, and there seems to be enough room for price to continue its move southward: a major support – the Weekly chart most recent swing low @ 91.70 (which we’ve highlighted using the blue broken line) is still some pips away. Also, price has broken below the previous day low. The current price behavior is good enough to sustain our bias for a downward price move – from a day trade perspective. On the H4 chart (attached), price has broken the most recent swing low @ 92.53 (which we’ve highlighted using the blue broken line) downward. That sustains our bias in favor of a downward price move. The white horizontal line @ 93.04 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact. The Hourly chart (attached) is currently forming a tradable pattern. Price bottomed @ 91.93 and it has started its retracement upward. We expect price to retrace to the area between 92.49 and 93.03 (which is the area between the 50% and 100% fib. retracement levels – drawn from the most recent Hourly swing high to the current price-bottom). NOTE that price has reached the 50% fib. ret. already. Let’s seek to sell around this area. If price exceeds the 93.03 level upward, our bearish bias is no more valid and we enter a no-trading zone. Our primary profit target is @ 91.63 (the 127% fib. ext.). The 15min. chart (attached) gives us a clearer view of the Hourly price action and the potential areas to sell (please note it’s advisable to set a Limit order ahead of time as price could move up to these levels and reverse sharply in our favor). This chart is rather cluttered but if we look closely, there are a couple of potential reversal levels available. You choose your preferred level based on your personality. fib 50% ret. @ 92.49 (you would be in the trade already if you chose this level – please manage your trade properly); fib 78.6% ret. @ 92.80. Initial Stop Loss @ 93.07; primary Profit target @ 91.63 (Please remember to factor in your broker’s pip-spread). Please note that these Fibonacci (fib.) levels have other pivots, overlapping fibs or previous highs/lows supporting them (they are the cause of this cluttered chart). As such, price could reverse at any of the points. The issue here is that the higher the fib level you choose to sell from, the smaller the pips you’ll risk and the more your pip-profit; BUT, also the more the likelihood of you missing the trade as price might not retrace that high before moving back downward. You need your own discretion here. Please keep your risk low. Don’t risk more than 2% of your capital. Personally, I risk about 0.5% per trade; and each trade has a potential profit target of 1% or more – based on my exit levels. We MUST NEVER assume we KNOW where price is going next! P.S.: Also, always keep in mind any major news releases. Be wary of possible price volatility during these periods.
Pls NOTE that a new swing high @ 92.56 (highlighted with the white dashed line) has formed on the Hourly chart (attached). With the new swing high, price move above the 92.56 level invalidates any Short trade set-up – based on the method discussed on this thread. Consequently, if you took a Short trade based on the 50% fib. ret. (92.49), please manage your trade properly. Your position is still very much promising as price has the potential of moving further downward to hit your profit target. However, if you were targeting the 78.6% (92.80), that level is no more valid for a Short trade entry – again, this invalidation is based on the method discussed on this thread. Also, be very much aware that major news are being released in the US and Europe around this period.
Pls NOTE: Based on personal experience,if there’s one particular day in every month that day-traders employing trending patterns should be wary of trading most, it has to be the first Fridays of every month when the Non-Farm Payroll (NFP) report is usually released. Early market hours are usually dull; afterward, usually around the news release, we have extreme volatility, which disrupts any recognizable chart patterns; hence, the entire trading day becomes virtually un-tradable. Price action on the GBPUSD pair is buttressing the fact that today isn’t the best of days to contemplate trading: On the Daily chart (attached), price action is somewhat confusing – probably reflecting the current collective attitude of traders. On Wednesday, despite the overwhelming number of factors supporting the bears’ dominance, the “loner” upward trend-line (the upward trending red solid line – NOT the bold line) proved its strength as price wasn’t only unable to close below it, but price was forced to reverse upward. Currently, price is in a rather confused state: a previous upward trend-line (the red dashed line) that price broke below about a week ago, which has been acting as a strong resistance area, again, halted price reversal upward yesterday; a downward trend-line (the downward trending red solid line) is also a level price has to close decisively above if we’re going to expect further price movement upward. As we could see, studying today’s price action on the Daily chart is rather perplexing; and it gives more credence to the fact that traders are probably waiting for the NFP report to act decisively.
many thanks Tunji
it nice to see a naija guy doing great things out there. this further proves that we are not dull nor lazy if given the right opportunity.
please i like to find out from you how u use your fib levels.
how often do you draw your fibs level, is it at every swing or at specific dates and events?
many thanks Tunji
it nice to see a naija guy doing great things out there. this further proves that we are not dull nor lazy if given the right opportunity.
please i like to find out from you how u use your fib levels.
how often do you draw your fibs level, is it at every swing or at specific dates and events?
Ignored
Austineejo, thanks a lot for your kind words. Primarily, I use Hourly swings; but as you probably know, the Hourly swings sometimes coincide with previous daily highs/lows and other past events, which automatically give more credence to their strength.
Today, we have Bank Holiday in the US. Consequently, quite a number of traders won't be in the market, and there might be thin volume. I was unable to have analysis posted during the London session; however, current price action on the GBPUSD pair seems to be giving us new signs. This analysis might be useful for those of us trading the late New York session: On the Daily chart (attached), price is currently at a resistance area: a previous upward trend-line (the red dashed line), which we've been discussing for some days now. Though, we are yet to know if price would break above it, or if price would be forced to retreat downward, let's have it in mind that the bulls might be having a tough time around this area. On the H4 chart (attached), price has broken the most recent swing low @ 1.6364 (which we've highlighted using the blue broken line) downward. That shifts our bias in favor of a downward price move. The white horizontal line @ 1.6443 highlights the most recent swing high, and as long as price stays below it - in the absence of any new and lower swing high - our bearish or downward bias remains intact. On the Hourly chart (attached), we have the price action buttressing our bearish bias: price has broken the most recent swing low @ 1.6364 (that we've highlighted using the blue broken line), which also happens to be H4 most recent swing low. Also, we have a negative MACD divergence. Please keep this current price action in mind as you place your trades. Have a happy Labor Day.
Since the beginning of August, higher time frame charts have been signaling the possibility of bears dominating the GBPUSD for a relatively protracted period. However, while the Monthly and Weekly charts are still giving bearish signals, the Daily chart (attached) seems to be having a change of mind: The negative MACD Divergence has been weakened and MACD is about crossing its Signal Line upward. MACD's close above its Signal Line at the end of today will invalidate the negative Divergence. Also, we would notice that after price broke decisively above a downward trend-line (the down trending red line), it seems determined to close above the resistance area - a previous upward trend-line (the red dashed line), which we've been discussing for days. The next critical resistance level that might halt the bullish surge is a Daily swing high @ 1.6623 (which we've highlighted using the blue broken line).
On the H4 chart (attached), price has broken the most recent swing high @ 1.6442 (which we've highlighted using the blue broken line) upward. That shifts our bias in favor of an upward price move. The green horizontal line @ 1.6321 highlights the most recent swing low, and as long as price stays above it - in the absence of any new and higher swing low - our bullish or upward bias remains intact.
However, we still need our Hourly charts - using Fibonacci retracement levels and important support levels - to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today's up-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
Tunji, my heart swell with pride for naija. You are the first I have met in a long while I can call a trader. Reading through your posts shows you know what you are talking about.
I will run through the thread and make my contributions.
On the Daily chart (attached), the coast seems so clear for the bulls: price has broken the year high - a very major resistance level @ 1.4447 (which we've highlighted using the blue broken line) upward. Pls NOTE that price didn't just break this level, it closed comfortably above it. Also the downward trend-line was broken upward without much effort. These two signs, especially the broken year high, simply tell us there's a high probability that the bulls might be reigning for a considerable period of time. Really, the price action is so clear that there isn't much to analyze.
On the H4 chart (attached), price has broken a recent swing high @ 1.4359 (which we've highlighted using the blue broken line) upward. That shifts our bias in favor of an upward price move. The green horizontal line @ 1.4190 highlights the most recent swing low, and as long as price stays above it - in the absence of any new and higher swing low - our bullish or upward bias remains intact.
However, we still need our Hourly charts - using Fibonacci retracement levels and important support levels - to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today's up-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
Tunji, my heart swell with pride for naija. You are the first I have met in a long while I can call a trader. Reading through your posts shows you know what you are talking about.
I will run through the thread and make my contributions.
On the Daily chart (attached), we would notice that price has decisively broken below the 1.0600 level, which we've been discussing for a few weeks. Consequently, there is the high probability of price moving further downward. The dollar has been under intense pressure as investors bet on economic recovery through higher yielding currencies. This fundamental perspective only strengthens the validity of the price action seen on our charts. Although - based on the Weekly and Monthly charts - we still have a number of critical support levels that the bears will have to face, the coast is currently clear for a continuous downward price movement.
On the H4 chart (attached), price has broken the most recent swing low @ 1.0430 (which we've highlighted using the blue broken line) downward. That sustains our bias in favor of a downward price move. The white horizontal line @ 1.0487 highlights the most recent swing high, and as long as price stays below it - in the absence of any new and lower swing high - our bearish or downward bias remains intact.
However, we still need our Hourly charts - using Fibonacci retracement levels and important resistance levels - to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today's down-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
Good call. I don't find overlapping Fibs but there could be a Gartley setup around 78.6 level and daily R1 @1.0466 area. The swing low came close to be breached but the price stopped 3 pips short making it a valid Gartley.
Good call. I don't find overlapping Fibs but there could be a Gartley setup around 78.6 level and daily R1 @1.0466 area. The swing low came close to be breached but the price stopped 3 pips short making it a valid Gartley.
On the Daily chart (attached), while the Monthly and Weekly charts are still giving bearish signals, the Daily chart has signaled move in the opposite direction. The negative MACD Divergence, which was a primary factor that sustained our bearish bias for weeks, has been invalidated: as seen on the lower pane of the chart, MACD has crossed its Signal Line upward. Also, yesterday, price closed above a strong resistance level - a Daily swing high @ 1.6623 (which we've highlighted using the lower blue broken line). The next critical resistance level - the year high @ 1.7042 (which we've highlighted using the upper blue broken line) is a defining level that, if broken upward, would invalidate every indicator supporting a protracted bearish move that we discussed throughout the entire month of August. In all, from a day-trade perspective, we have a strong case in favor of a continuous upward price movement.
On the H4 chart (attached), price has broken the most recent swing high @ 1.6591 (which we've highlighted using the blue broken line) upward. That sustains our bias in favor of an upward price move. The green horizontal line @ 1.6479 highlights the most recent swing low, and as long as price stays above it - in the absence of any new and higher swing low - our bullish or upward bias remains intact.
However, we still need our Hourly charts - using Fibonacci retracement levels and important support levels - to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today's up-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
On the Daily chart (attached), we would notice that price is in a strong down trend: price pattern keeps forming lower highs and lower lows. In addition, price has broken a very strong support level - the most recent Weekly swing low @ 91.71 (which we've highlighted using the blue broken line on the Daily chart) downward. These are strong signs that the bears are fully in control. However, price has currently hit the lower edge of the downward channel - a potential support area, and it's yet to close below it; also, price is yet to gather enough momentum to break below Friday's low (the last trading day low). This current price action is a warning that, though price is in a strong down trend, an upward retracement might be imminent. Consequently, let's keep these support areas in mind. Conservative traders would probably prefer to see price close and break decisively below the lower edge of the downward channel and Friday's low, respectively.
On the H4 chart (attached), price has broken the most recent swing low @ 91.42 (which we've highlighted using the blue broken line) downward. That sustains our bias in favor of a downward price move. The white horizontal line @ 92.24 highlights the most recent swing high, and as long as price stays below it - in the absence of any new and lower swing high - our bearish or downward bias remains intact. But, let's not forget the possible price retracement signs discussed on the Daily chart.
However, we still need our Hourly charts - using Fibonacci retracement levels and important resistance levels - to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today's down-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
