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TECHNICAL ANALYSIS

Further Weakness On The GBP/USD?

Further, Weakness, GBPUSD, Technical Analysis, monthly, weekly, daily, chart, fx trader, forex

The GBPUSD still looks very bearish and, as a long term trend trader, I would like to see price weaken all the way through to the 1985 low at the figure 1.0000 support.

Trading is best kept simple, but as humans, we tend to complicate matters as the human brain often fails to accept that something so simple could be so powerful. This is why charts of modern traders tend to be over cluttered with various support and resistance lines, numerous sub chart indicators (which usually tell you the same information so why not keep it simple and have just one?) various fib levels and more.

As private traders, we have an edge as we do not have to follow government rules and regulations, unlike institutional traders. We are in a lawless environment where every trader is an alpha but one must learn to keep their ego in check and create rules to abide by. The challenge to trading is creating rules that work. Many set out to create their own rules and many fail. When I started trading, I simply wanted rules that work which is why I went after looking for quality mentoring. I simply had no time, and in reality, no inclination to figure this out on my own. I simply wanted to make more growth on my hard-earned savings and leverage my salary in the most efficient way possible, both in terms of time and money.

So looking at the GBPUSD, let’s strip away from all the clutter and look at a few simple proven rules that will bring simplicity and consistency to your trading.

Let’s first of all identify 3 goals that we want to achieve from this article.

Goal 1: Identify market conditions and know when to trade and when to stand aside.

Goal 2: Identify when to enter into a trade using a breakout.

Goal 3: Identify how long we could hold onto the trade once triggered to maximise profit.

Goal 1

I use the monthly, weekly and daily chart  in unison to engage in overall market conditions.

Monthly

The monthly is used to give me an indication of how well a currency, stock or commodity trends. In this case of the GBPUSD, we can see this has been weakening in a neat fashion since 1.7000 resistance in 2014.

Further, Weakness, GBPUSD, Technical Analysis, monthly, weekly, daily, chart, fx trader, forex monthly

Monthly chart

I want to see price trading outside of the pink lines displayed on the chart, which represent the high and low of the previous calendar year, so in this case, 2015. This is one the simplest techniques to determine if price has a bullish or bearish bias, where we could look to go long or short respectively, or trading in a range where we stand aside. How do we do this?

- If price is trading above the pink lines, price has a bullish bias (e.g EURGBP)

- If price is trading below the pink lines, price has a bearish bias (e.g. GBPUSD)

- If price is trading inside the pink lines, stand aside (e.g.EURUSD)

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