The GBPUSD is trading around an important long term support level, and as you already know, when the market trades around an important LT level, it creates a short term range, in this case the pound-dollar’s range is from 1.6202 to 1.6072:
So basically what I’m waiting for is a breakout of either extreme of the range to start looking for a trade opportunity.
Here is my trading plan:
If the GBPUSD breaks the ST support level, I will be looking for short trade opportunities. My next LT support level is at 1.5806
If the GBPUSD breaks the ST resistance level, I will be looking for long opportunities (my next LT resistance level is too close, so need to make sure the trade has a good Risk-Reward ratio).
If the Pound-dollar keeps trading in between both ST levels I will do nothing.
The GBPUSD is trading just at an important long term resistance level around 1.6986. The thing is, the market is creating a short term range in between 1.6907 and 1.6988. Please take a look at the next chart:
We need to see a break of the short term range before we start looking for trading opportunities. Seeing the EURUSD already broke the top of the range, my bias would be long in the GBPUSD, but we can’t take decisions based on other currency pairs, we need to wait.
My trading plan:
If the market breaks the short term resistance level, I will start looking for long trading opportunities, the next long term resistance level is at 1.7477.
If the market breaks the short term support level, I will start looking for short trading opportunities, the next support level is at 1.6552.
The GBPUSD was rejected from the long term resistance zone around 1.6620, this makes me think the market will go short in search for the next support zone, located around 1.5914. Please take a look at the chat below:
My trading plan:
As long as the market continues to trade below 1.6327 I will look for short opportunities (already have one short). All take profit orders will be placed 40-50 pips above the main support zone.