GBPUSD Trading Lower After Yesterday's Buy Signal

GBPUSD, Weekly

After breaking out of the descending regression channel GBPUSD made a brief move outside the upper Bollinger bands before falling back to current levels. The pair has found some support from the 50% Fibonacci level and has moved sideways since Monday. This is however a mid-range level that could get broken due to the fact that this market is not extended to the downside. Weekly pivot low resistance is at 1.5390 (relatively close to current price). Current levels are therefore more risky and I would be interested in long trades at lower levels, between 1.4962 and 1.5054. With support and resistances so close to each other it’s likely though that this market will be range bound for the rest of the week.


GBPUSD, Daily

The March 18th high created a support level that was strong enough turn GBPUSD higher in the beginning of May. Now this same pivotal candle support coincides with lower daily Bollinger Bands and the 50 day SMA. At the same time Stochastics oscillator is pointing higher after it was oversold. After last two weeks’ downside movement the pair closed yesterday above previous day’s high. When this takes place at support level it is a Bullish signal and should be taken as an alert to look for smaller time frame charts in order identify right levels for buy signal monitoring. However, this has to be taken as a very short term indication as the resistance level at 1.5447 is not very far. This is likely to test the commitment among the buyers should the short term indications prove to be correct. The 50% Fibonacci level is slightly above the aforementioned resistance at 1.5498 while the nearest daily support levels are at 1.5164 and 1.5089.


GBPUSD, 240 min

After hitting the upper Bollinger bands and 50 period SMA, price has fallen back to the level it broke out from the 4h descending regression channel. This level is highlighted by the 50% and 61.8% Fibonacci retracements and at the time of writing price is trading just above the 61.8% Fib level. Hourly chart created a pin bar pointing to a potential reversal and there was an attempt to take the market higher. However over the last two hourly bars the upside momentum has been non-existent and price has corrected lower. The resistance level at 1.5326  (coinciding with 23.6% Fib level) is relatively close and could well be the reason for sluggish performance. Apart from Fibonacci levels the nearest support level is at 1.5210 and coincides with 4h lower Bollinger Bands.

Conclusion

In the weekly context GBPUSD is still relatively close to the upper Bollinger Bands. Also, price trading at 50% Fibonacci retracement points to the fact that this level is mid-range and therefore not the ideal area for a weekly turn around to take place. Also the weekly pivot bar low at 1.5394 is relatively close to the current price and suggests further weakness could be ahead over the coming weeks. However, before that is likely to happen we might see a rally to the 1.5447 resistance as daily time frame has some supporting elements for the pair (lower Bollinger bands, 50 day SMA and historical support at 1.5164 ) and there was a daily buy signal yesterday (a close above previous day high). Support and resistance being relatively close to each other could lead to a range bound market. As per usual, look for lower time frame price action to confirm any trading ideas at support and resistance levels.