How to trade this plan
1. Support and resistance zones shown in green and pink with arrows indicating direction. Bulls buy at support and bears sell at resistance.
2. Keep in mind that when price breaks through support the level will be tested in future as resistance – this is called role reversal.
3. Market direction indicated by 21 and 55. Take note of where the 21 is in relation to the 55 and where price is in relation to the 21. Also take note of the width between the two moving averages. If price is below the 21 you may consider looking for selling opportunities. If the 21 is dynamic resistance then if price falls from the 21 it predicts a lower low – the opposite applies when the 21 is dynamic support. If the 55 is dynamic resistance then if price falls from the 55 it predicts a double bottom – the opposite applies when the 55 is dynamic support.
4. Direction of price is indicated by 5 and 8 MA’s and stochastic cycles. Remember that when you line up higher and lower time frames, price is going in the same direction. The goal is to line up market and price while using support and resistance as your leading indicator.
5. Pay attention to reversal patterns on higher time frames when in a trending market – a reversal pattern could mean the end of a trend. Keep in mind that a reversal pattern that is not at support or resistance is meaningless.
6. Pay attention to reversal patterns on lower time frames when confirming your entry and if you want additional confirmation wait for a 5 8 cross on M5 or M1 before entering your trade. Remember – we enter on the second chance on the 5 minute chart.
7. I have added a summary under the H1 chart indicating observations and trade plan.

Note:
a. Please read Kate’s post on Forex Major Currencies Outlook everyday so you are up to date with the latest news. Here is today’s post: Forex Major Currencies Outlook (Aug 25, 2016)
b. Please be aware of risk events for the day by using the Forex.Today calendar
c. Watch Wayne’s webinar daily at 13:30 SAST or catch the recording on the Forex.Today Youtube Channel

GBPUSD Daily

GBPUSD H4

GBPUSD H1

Yesterday we smashed through resistance with a bull target for the week at WR2. Market is bullish and we continue to make higher highs and higher lows. Price is currently at support - should we up from this point the target for the day will be DR2. Note the monthly and weekly pivot points just above DR2. MM3 is the beginning of the top of the range. Remember that Yellen speaks tomorrow - a dovish tone indicating no rate hikes this year will mean USD weakness and GBPUSD up. A hawkish tone indicating a hike in September or December will result in USD strength and GBPUSD down. In the meantime, until we see a reversal pattern on H4 - and stop making higher highs and higher lows, the market remains bullish. If price moves up from the current support level I will jump into M5, confirm the bullish move and then take the second chance. If we break support then I am looking to buy at the H4 21 and expecting a higher high.

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