QUICK ANALYSIS: GBPUSD: Up or Down?

As a trader, one of the things you must do to be successful is to keep an open mind. NEVER get so bought in to your analysis that you fail to see the flipside. Our mentality as humans is that we're never wrong. And that if something does not go our way, it's somebody else's fault or something else went wrong like "oh, it was some unexpected bad news release" that caused my analysis to be wrong!". NO! as a hybrid technical analyst, I believe that the price action is the only thing that matters and that fundamentals are already written into the PA although they can't and should not be dismissed outright.. Bruce Lee said, "Be like water". That applies to trading as well. You must go with the flow of the market. Don't ever be so sure you are right that you stick with your analysis to the bitter end. If wrong, look with an open mind why you are wrong and go with the flow. Be like water, my friend! Be like water!

After having said that, I looked again at this pair with a fresh outlook. Wiped away all my drawings and started with a clean slate. Why did I do that? Because I need to see both sides of the coin and be prepare whichever way the market goes. I do this very often in my trading when confused and try to find clarity. It's a lot of work. But the payoff is well worth it.

To that end, what you are seeing here are 2 scenarios. Instead of putting up 2 separate charts this time as I sometimes do, I wanted to put everything on 1 chart so to make it as clear as possible what my plan is whichever way the market goes. I also tried to keep it as simple as possible as well...again for clarity's sake.

Basically, prices are caught in a tight trading box right now. I call it the "Make-Or-Break" box. If it breaks out to the top of the box, then likelihood it will go towards the bat pattern. If it breaks to the downside, likelihood it will break to the bullish butterfly. You also see that I have marked out a H&S pattern. Now, I know this H&S is not occurring at any top or bottom but rather in the middle of a consolidation but taken in itself without regards to the previous trend, it is a H&S pattern. H&S patterns of this nature do not have a high success rate but they are valid nonetheless. The neck line is clearly marked as well as the B point line of thee butterfly, Should prices break the box to the downside and then subsequently break the neck line and then the B point, we have a confirmed downtrend and will get to the butterfly completion point at least if not more. If it gets that far, then it will test the Goldilocks Zone before possibly reversing.

Overall, I am still bullish on this pair and believe that a MAJOR downtrend is not yet forthcoming and that the current consolidation is not over. So even if it breaks to the downside, I will be looking for that bottom and a reversal. But that maybe a ways off. If it goes down.

If it goes up, simple. Then I follow my previous analysis in my previous posts. As of now, I am neutral and will wait for the "Make-or-Break" box to get broken. Then I'll react.

*DISCLAIMER:
Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!

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