#AUDUSD, I want to zoom out to the weekly chart, first off, to give it a longer-term vantage point for this currency pair. That’s the long-term downtrend. The black trend line you see coming down from the top of the chart. This pair has been in a downtrend for several years, and you could see at least going back to 2014, but even back to 2013, you could see the downtrend has been clearly in effect.
I don’t think we’ve seen any indication yet that that downtrend is going to change. Everything still points to the downtrend and no technical indicators telling us that this downtrend is going to change. So, we go back to the daily timeframe. We’ve been talking about this purple-shaded area, the top shaded zone on the chart, as a resistance zone. Over the past five days, we saw resistance into 0.7340, 0.7375. As the market held underneath there, there was an expected resistance, and now we see that fall coming back down in towards the 0.7100s.
The support and resistance found within there. So, within that, we see the yellow-shaded area finding support on the far-left hand black box, the yellow-shaded area finding support in the center black box, and you could see resistance at the purple zone. Yesterday, we were talking about the fact that we could see something very similar to that, but watchful for clues to support and reversal to go back up, but also clues to a breakout to turn back lower for this currency pair.
And as you could see, it found a little bit of support yesterday, but nothing really significant and now has broken down through that yellow zone. With some negative news out of China on trade balance, we see this breaking through the support and pushing down towards the next support level, which is down here towards the 0.7200-level, the orange-shaded area. Let’s zoom it in one more time here, and you could see that orange-shaded area. Not only do you have historical resistance and support into that area which is a pretty important area for the #AUDUSD right around 0.7200.
So, I would suspect there will be some support here today. Not a great place to go short. If you’re looking to go short with the run we’ve seen over the past couple of days and that negative news we saw out of trade balance out in China, if you’re looking to go short here, of course it would be preferable to see a rally into resistance first. That would be, now, the yellow zone. As you could see right here, support at the orange zone and resistance at the yellow one. You could even see some of that back here on the left. So, if you’re going to go short, this is not the place to do it. You want to wait for it to go back up to the yellow zone. That’s the better risk-reward option for the currency pair.
A break back above the yellow-shaded area, of course we look for it to go back up again. I would suspect also if it breaks down through the orange-shaded area, the 100-daily moving average, we’ll likely see it all the way back down here towards the 0.7100-level. That’s the blue-shaded area and by the way, the bottom of our red triangle pattern that we’ve been studying in the live Trade Room.
#GBPUSD clearly we have been talking about this falling range or falling wedge, if you want to call it that, over the past several weeks in the live Trade Room. Red trend line clearly down. Black trend line is also clearly down. So, we’ve seen falling highs and falling lows. That’s the direction we’ve been focusing most of our efforts in. It’s been a little period of congestion in this black box right here over the past several days. We did get a dip down the 1.4900, a rapid reversal, but now we see it taking another turn lower in the direction of the trend.
I was hoping to see it push a little bit higher. Zoom it in a little bit. Push a little bit higher towards the red trend line into the 1.5200-level, but never made it past the 1.5130s or so. So, unable to make it back up there. It’s now started to work its way back down, retracing much of the move from last week. Let’s take a look at this green-shaded area. Zoom it in one more time. Take a look at the green zone. We saw support on the left-hand side of the low. We were looking for potential support there over the past several hours, looking for potential support into the 1.5000-level. It has not even shown any clues to support or reversal from that level, so we’re not in a buy, but for the day today, we are looking for the breakout clue underneath the green-shaded area. Breakout clue would be an open and close. A single candle body that opens and closes under 1.5000 gives us a clue it’s going to continue to pressure back down towards the 1.4900-level and our last lows and maybe even making a new low.
We take it down to the four-hour timeframe. We could see, even here on the four-hour timeframe, not yet do we have an open and close underneath the 1.5000-level. That will be my trigger for this currency pair. I’d like to see an open and close under 1.5000. Maybe even a rally and retest of 1.5000. Underneath it as resistance to give us a low risk, high reward opportunity to target back down the 1.4900. That’s the orange-shaded area all the way at the bottom.
Now, if, today, maybe even the current four-hour candle or the next four-hour candle gets back above the green-shaded area and turns back higher above 1.5000, that could be our first clue and sign of reversal that we’re looking for it to go back up. So, two things to watch for, either an open and close underneath 1.5000 to give us higher confidence that it’s going to continue to go to 1.4900 or a reversal back above 1.5000 and the green-shaded area gives us clues that it’s going to turn back higher and start to work its way back up, maybe even towards the 1.5200-level that we’ve been talking about over the past few days.
One last thing here before we move on, Fibonacci from the low to the high of the last run there that we see. From the lowest low on the chart to the most recent resistance high puts the .618 at 1.4994. Guess what. We’re right underneath that right now. So, again, a break of the .618, we have a clue that is going to head back down to the mid or the low-1.4900s for the GBPUSD today
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José Ricaurte Jaén is a professional trader and Guest Editor / community manager for tradersdna and its forum. With a Project Management Certification from FSU – Panama, José develops regularly in-house automated strategies for active traders and “know how” practices to maximize algo-trading opportunities. José’s background experience is in trading and investing, international management, marketing / communications, web, publishing and content working in initiatives with financial companies and non-profit organizations.
He has been working as senior Sales Trader of Guardian Trust FX, where he creates and manages multiple trading strategies for private and institutional investors. He worked also with FXStreet, FXDD Malta, ILQ, Saxo Bank, Markets.com and AVA FX as money manager and introducing broker.
Recently José Ricaurte has been creating, and co-managing a new trading academy in #LATAM.
During 2008 and 2012, he managed web / online marketing global plan of action for broker dealers in Panama. He created unique content and trading ideas for regional newspaper like Capital Financiero (Panamá), La República (Costa Rica), Sala de Inversión América (Latinoamérica) and co-developed financial TV segments with Capital TV.
He is a guest lecturer at Universidad Latina and Universidad Interamericana de Panamá an active speaker in conferences and other educational events and workshops in the region. José Ricaurte worked and collaborated with people such as Dustin Pass, Tom Flora, Orion Trust Services (Belize) and Principia Financial Group.