Today is Saturday and I was thinking about doing a follow-up on my previous Gold and BTC analyses. But price is still moving between the zones without touching any of them — so I will wait a little longer before revisiting those. In the meantime, let us look at GBP/USD.
For this analysis I am only using the Daily and 4-hour charts. GBP/USD has been moving sideways for quite some time, but there are a few important areas I will be watching next week.
The Daily Chart
I always start from the higher timeframe because it gives me the overall context before I look for trading opportunities on the lower timeframes.
On the daily chart there are three major zones — daily resistance, daily support, and a liquidity zone below the support.
Liquidity is simply an area where many stop losses or pending orders are sitting. Price often gets attracted to these areas because large orders can be filled there.
Below a support zone and above a resistance zone there are always orders sitting — both can be called liquidity zones. But I have only drawn one liquidity zone here, and here is why.
Looking at the chart, there are equal lows sitting just below the daily support — essentially a double bottom. Below the equal lows there is liquidity. Below the support itself there is also liquidity. Combined, these two areas create a stronger concentration than either one alone. That is the zone I expect price to be attracted to if it breaks lower.
The 4-Hour Chart — What I Am Watching
On the 4-hour chart, price is currently near the 4-hour resistance zone. From here I see two scenarios.
Scenario 1 — Bullish continuation: Price breaks through the 4-hour resistance and moves toward the daily resistance. In this case I am not taking any trades unless price breaks the daily resistance or gives a clear reversal confirmation that aligns with my setup and rules.
Scenario 2 — Bearish continuation: Price gives a 1-hour BOS to the downside with a clean FVG forming. In this case I will look for short trades targeting the daily liquidity zone below the support. This is the scenario I am currently leaning toward — there is more liquidity below the support zone and price tends to move toward where the most orders are sitting. That does not mean price has to go there first. It simply means that, at the moment, I think the downside offers the stronger draw.
Invalidation: If price breaks above the 4-hour resistance with strong momentum and starts holding above it, my bearish idea becomes much weaker. That would be the signal to step back and reassess.
I would actually prefer price to do nothing on Monday than give me a poor setup. Watching the market without trading is still part of trading.
Until one of these scenarios plays out clearly, I will stay on the sidelines. I would rather miss a move than force a trade that does not fit my rules.
The market owes us nothing. My job is simply to prepare for the possibilities and react when the evidence appears.
Bye for now, take care.
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