How to trade this plan
1. Support and resistance zones shown in green and pink. 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. You can follow Kate here
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

Pound is currently at the bottom of the lowest point after Brexit, sitting at MS1. There is no fundamental reason for Pound to strengthen though one must be careful of selling at the bottom of the range. Instead - look for a break of the range and then sell the pull back.

GBPUSD H4

Price hit the weekly Bear target yesterday and has continued falling past WR2. Take note of the black line at 1.27976 - this is the bottom of the range. Should price retest this level, look for a selling opportunity by confirming bearishness on a lower time frame chart.

GBPUSD H1

Market is very bearish, resistance highlighted in pink. Should price return to this area, look for an opportunity to short by confirming the sell on a lower time frame chart.

GBPUSD M15

I have highlighted the role reversal in pink. Also keep an eye on the 21 and 55 EMA as they will play as dynamic resistance.

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