Putting short-term and long-term charts in perspective

 

 

Did you ever encounter different views on a different time-frames? Showing you a different picture. What to choose for trading? What strategy? That is where your sense of trend direction kicks in. What do we have looking at the GBPUSD charts now?

Looking at the monthly chart above we can see that the pair is testing the strong downside support 1.2700 level and we can see a break below this level or a bounce which will determine the future direction.

For some traders which are not using the top-down trading analysis, the problem is arising when they look at the weekly chart and they are intrigued by the latest test of the strong horizontal 1.2660-1.2700 zone. Some see this as a bottom for an uptrend continuation. A daily close below the 1.2660 will completely invalidate the upside swing and it could lead to a great downside extension.

 

A Daily chart is revealing the 1.2660 level uptrend horizontal line support and traders should be looking for the long trades from here. Your stops should be below the 1.2660 level. This will be then a long trade with the 20 pips  of the risk comparing to 300 pips which is excellent for trading. In case of the daily close below the 1.2660 level will open the high probability short trade entries.

 

 

The main conclusion of this technical analysis insight is that in the medium-term GBPUSD will have a higher probability to swing higher and the invalidation of this swing higher will come only on a daily close below the 1.2660 level.

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