This article is from my technical perspective based on price action for 3 forex pairs: USD/JPY, GBP/USD and EUR/USD.

The tidbits relate to how I use Fibonacci levels (on "1 Month", "1 Week" and "4 Hours" charts); and how I'm seeing price action on "4-hour" chart at the moment.


Figure 1: “1 Month” charts of USD/JPY, GBP/USD and EUR/USD.

From figure 1, I’ve used Fibonnacci retracement (or Fib.) levels to get a simplified view of possible support and resistance levels. Those levels nearest to current price are colored in red (for resistance) and blue (for support).

For both USD/JPY and GBP/USD, I’ve included a secondary pair of Fib. levels (their widths are thinner than the primary Fib. levels) as price seems to react well around these levels also.

For USD/JPY, USD has been gaining more buyers than JPY and we’re seeing the tallest, bullish momentum candle for the current month. The nearest resistance (in red) levels could be a good place for profit-taking after such a vigorous up move.

For GBP/USD, its current candle is nearer towards the blue level than the red level. Its price is mildly bearish for this month.

For EUR/USD, its price is reaching towards the blue level. Overall, its price movement is still range-bound within Fib. 0% and 100% levels.


Figure 2: “1 Week” charts of USD/JPY, GBP/USD and EUR/USD.

From figure 2, you could see how prices of these 3 pairs react to the Fib levels. If price reacts quite often to those levels, that means I’ve placed them correctly and they should be useful for future reference.

USD/JPY has closed its previous week near to the secondary Fib. level. Its current candle has been fluctuating around last Friday’s close.

GBP/USD seems to be forming a range from the past six candles. Its current candle is mildly bearish for this week.

EUR/USD is bullish for this week at the moment. Current price is around the mid-point between its blue and red levels.


Figure 3: “4 Hours” charts of USD/JPY, GBP/USD and EUR/USD.

For GBP/USD, I’ve drawn a 3rd Fib. levels as the levels from the other 2 Fibs. are too far away to view in this time-frame.

For each of the 3 charts, I’ve added a box and a circle.

The box is the "shake-out" zone where many stops (or open positions) have been taken out.

The circle is where those that opened long (in blue) or short (in red) positions see price breakout failed (or fake-out). When fake-out happens we could see price heading towards previous swing low/high; as shown from the red box.

We usually see break-outs and shake-outs happen on hind-sight. It helps to draw the circle and box to get a better perspective going forward.

From the above 3 charts, I’m seeing price fluctuating within a range.


Going forward, how they react at the Fib levels would be interesting.

That's it!


Hope it helps.

Thanks for dropping by!

Best Regards,

Edwin

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Towards sustainability, and beyond !

PS: Click "sustainability" for the link to my article on risk management (relating to leverage and trade sizing).
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