This week we've seen GBP/USD blow through higher time frame resistance and continue its march higher.
While I normally like to show price movement around support/resistance zones on a daily chart, I've today shared a weekly in order to highlight the significance of the historical zone that we currently have in-play.
Let's start with the higher time frame weekly chart.
That touch to the left is February 2018.
Yep, 3 years ago and still respected to the pip.
No matter how many times I see this on the charts, it still blows my mind.
Support and resistance zones are obviously respected and developing a trading strategy that uses SR to manage your risk is a simple way to become a consistently profitable forex trader.
Don't believe me?
Just take a look at how price reacted around this zone from 2018 on the hourly chart below.
You can see that price came down into the daily support zone on the 24th and by the 26th it had bounced out, signalling that higher time frame support had in fact held.
A signal that we want to only be attacking GBP/USD from the long side.
In order to be able to manage our risk, we draw a short term zone from the last area of resistance that when retested as support, can be used as an entry.
What this does is ensures that both higher time frame and intraday momentum is moving in the same direction and allows us to place tight stops.
Aggressive traders can place their stops below the short term zone, while more conservative traders will place theirs below the daily zone.
Either way, you can see that price has bounced and continues to rip higher.
We'll continue to add into our position on pullbacks and use trailing stops to kick us out when momentum finally comes to a halt.
Best of probabilities to you.
On the Calendar This Week:
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