Be aware of Directional Bias espeically when it comes to longer-term, intraday time frames.

This is more of a cautionary set up than one that I would’ve recommend taking. It involves the power of understanding the Directional Bias of the daily and how longer-term time frames (60 and 240-minute) entries should follow the Bias if there is a trend. This is indeed an (fresh) uptrend on the daily GBP/USD which means that any entry that would attempt to capitalize on weakness would be best taken on the five, 15, or 30-minute charts.

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The “twelve to two o’clock” uptrend on the 240-minute chart is pulling back and notice has even pierced teh bottom line of the Wave. Couple this move with a -100 or greater CCI reading and the result would be a Wave/CCI Reversal entry short. But wait…Isn’t the daily in an uptrend? I talk about this relationship a lot as it pertains to trade and time frame selection each and every morning on Forex AM.

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The idea behind Directional Bias as it applies to longer-term time frames is to acknowledge that 60 and most definitely 240-minute time frames require more organization of sentiment over a longer period of time for follow-through so it would be best to follow the dominant market psychology (the daily).

So while there may certainly be more “heat” involved with taking a swing BUY it’s following the uptrend (psychology) of the daily. The reversal (short sell) therefore should not even be considered. Had this been a 15 or 30-minute time frame a reversal entry short would be valid but beware of entering longer-term trades that go against the daily’s trend!

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