I am a Technical Forex Trader & Analyst.
Trading the Forex markets on behalf of Samuel and Co Trading in Watford. I am a Technical Trader, here to take on the game and prove the naysayers wrong. Come and join my journey as I release my weekly technical analysis and trade breakdowns - opening the floor to feedback, conversation and opinions. I look forward to engaging with you all.
This week I’d like to share a trade taken last week on GBPCHF, along with my technical analysis review of GBPUSD…
GBPCHF - Trade breakdown.
This trade I entered last week, actually came after a missed entry opportunity that had formed the day prior with a Double Bottom formation, along with an inside bar confirmation candle close. As this was a position my strategy caters for, instead of just jumping into the market and going long, I wanted to see the market pullback and form confirmation before placing my entry to the buy side. It was after this pullback where price formed an engulfing candle finish that prepped me for my entry (along with other strategy criteria having been met). My profit target for this trade was originally placed at the previous swing high resistance level - 1.316. The market failed to reach this previous zone and began to make lower high after lower high. It was now the case of being patient, trusting my trade execution and remaining calm whilst the market decided where it was heading next. Price then tried to break the resistance now turned support zone of 1.308 a good few times but was unable to break below and close, giving me confidence that the market will continue to move in my favour. Price eventually did continue in my favour but not quite enough as I wasn’t content with holding this position over the weekend, therefore I decided to take profit before the FX market came to a close on Friday evening. We can actually see that the market (at the time of writing this) is now well on its way again to my original take profit level around 1.316. Overall, a win is a win and I was more than satisfied with my 60 pip move, equal to 0.5% profit.
Moving onto my Cable (GBPUSD) Technical Analysis review -
GBPUSD - Daily
Looking at the Daily chart year on year, we can see a big 1,200 pip difference between where we were this time last year compared to now. With price back in April 2018 sitting around 1.437 and as of the time of writing this - sitting around 1.307. Nothing comes as a real shock or surprise due to the past 12 months (and longer) being so unstable as our House of Commons continues to pull the bones of this country from limb to limb with the smell of Brexit looming in the air. What’s to come within this pair over the next 12 months will be a very intriguing sight of events, as we are still yet to have a finalised outcome of this whole Brexit ordeal.
As always I’ll be looking to analyse this pair from a technical standpoint and will dive a little deeper to see where I’d be looking to take this pair from an intraday perspective. As we can see price has begun fluctuating since Nov/Dec last year within an ascending channel, will price continue to honour this channel formation? Or will we see price action break out? Let’s take a look at some possibilities.
GBPUSD - 4 Hour
Here we have a clearer view of how price has been moving since the beginning of the year (2019), forming nicely within this ascending channel. Move towards the middle of Feb and you can see price action has been ranging within the 1.300 and 1.330 zone - with price really finding a ceiling around 1.335; as the market tried twice to break through and close above but was unable to form a new higher high; equating in a Double Top pattern formation (a great signal for traders who utilise Double Top reversal strategies!). As price continued to range, we can see many failed attempts of the market trying to break and close below the 1.3 level. Is this too low for the pound? Is this a sign of stronger things to come? Or will Brexit continue to send the pound on a never-ending rollercoaster of uncertainty?! I believe the latter seems most appropriate!
GBPUSD - 4 Hour
As we get closer to the action on the 4 Hour Chart - we have a few possibilities that could pan out. My bias is towards GBP strength, I would have actually entered this market long - off of its last bounce from the bottom the ascending channel trendline that occurred around 5 April. From entering here, I’d still be aiming to take profit at the previous resistance turned support area of 1.32. But I digress, let us get back to how the market may move over the coming days/weeks:
In Scenario A - I have pound strength, breaking through its previous resistance zone, consolidate & pullback for a period, before continuing to rise all the way back up to the previous swing high Double Top zone of 1.335.
In Scenario B - If the price is unable to continue strengthening amongst the Brexit uncertainty, we could see the market proceed to break out the bottom of the ascending channel back down to the 1.3 floor zone. Can the price break that level? Or will we once again see another trendline rejection and see the price head back up towards the previous swing high level of 1.335?
As previously mentioned my bias is towards GBP strength, I feel the market is now looking to recover some of the 1,200 Pips it has lost over the course of the past 12months, but how much can it recover? And how soon?
I look forward to your thoughts…
Disclaimer: Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice.