Here is today’s Forex analysis and free FX advice on how to trade the GBP versus the USD:
It goes without saying that the GBPUSD is in a huge down trend. The currency fell close to 1,500 pips ever since the first drop.
This begs for questions and answers, such as:
a) How far can the currency drop before a bigger correction?
b) Once the correction starts, how long and big will the correction be?
Of course for traders who are holding position traders from higher levels are doing well and they can look for scale-in possibilities. Traders who have either missed the boat or have exited their traders however are analyzing for re-entry opportunities. And that is why Winners Edge is here to give everyone free currency trading tips and Forex trading lessons.
Those of you who follow this blog know that we have been warning for GU weakness ever since mid January. I myself have shorted the GU along the way at 1.6030, 1.5750-1.58, and at 1.54, but all my trades have been closed in the meantime. Now it’s time to reevaluate the GU. This is our Forex trading help and Forex guide:
On the week chart the GU has nothing but wide open spaces to the downside. The next major bottom on this chart is the 1.4250 level.
This indicates that there is no natural and substantial support on higher time frames that would act as a major bouncing area.
Furthermore we can see that price is clearly remaining under the 1.5250 level, which was former support and has now turned into resistance. We have 2 weeks of price action remaining under the break out level.
4 hour chart
On this time frame we are able to make the following conclusions:
– The currency bounced of the -0.272 Fibonacci target;
– The power to the downside is weakening because the distance between the bottom is becoming smaller and smaller;
– One could even make a case that the GU is building a falling wedge of some sort;
– There is 4 hour divergence with the new lows on the RSI indicator.
This information warns us that the downside could run into some potential bouncing spot.
However, that is highly dependent whether the down move has enough spunk left to push it to further lows.
I am therefore looking for the following:
1) A break of the bottom would spell a high likelihood of continuation. I will look for entries on short-time frames once the break happens. The next -618 target is at 1.46, so that would be swing trade target.
2) The falling wedge and divergence have their effect on the currency and the GU moves sideways. In that case I will be waiting for price to touch the top trend line for a continuation to the downside
3) The GU shows bigger signs of retracement by breaking the top trend line. In that case I will be waiting for a retest of the 1.51-1.52 area for another move down.
If you are looking to get extra Forex training, then it might be good to consider our LIVE TRADING ROOM. You have access to a free one day trial this Wednesday from 8am EST. Click here for all of the info. OR take a look at this link for more of our Forex services, including Forex mentoring.
Please let us know what your opinion is of the GU or another currency?
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