GBP/USD Signal Update
Yesterday’s signals were not triggered and expired.
Today’s GBP/USD Signals
Risk 0.50%.
Entry should be made between 8am and 5pm London time today only.
Long Trade 1
Enter long with a buy stop order at a next bar bullish break of the first hourly pin bar rejecting the support zone below 1.6325. The pin bar will need to be larger than any of the previous 5 bars and open and close in the top quarter of its range.
Stop loss 1 pip below the low of the pin bar, which should be the low of the day.
Take 50% of the profit when the trade is showing a floating reward to risk of 1:1. Leave the remainder of the position to run.
Long Trade 2
Enter long with a buy limit order at the first touch of 1.6235.
Stop loss at 1.6195.
Move the stop loss to break even when the trade is 25 pips in profit and leave the position to run.
Short Trade 1
• Enter short with a sell limit order at the first touch of 1.6619.
• Stop loss at 1.6660.
• Move the stop loss to break even when the trade is 40 pips in profit and leave the position to run.
GBP/USD Analysis
The USD rallied strongly yesterday against most currencies, but actually fell slightly against the GBP. The long-term bullish trend line has also held, although since yesterday evening the price has been falling towards it and the trend line may be in danger. So although we are still within the bullish channel, things are starting to look a bit dangerous for bulls. In addition to that, the price has recently formed a triangle and there will have to be a breakout in one direction or the other, as can be seen on the 4 hour chart below:
Despite the uncertain picture, I see two important levels that should hold: 1.6619 above and 1.6235 below, agreeing with Christopher Lewis’ identification of support at around 1.6250 yesterday.
The key thing about today is that there are important news and events that can affect both the GBP and the USD. There is important news due for the USD at 1:30pm London time (PPI), and the Governor of the Bank of England is speaking shortly afterwards, beginning at 2:15pm. Therefore this pair is likely to be very active today, and might swing wildly especially when the Governor is speaking. For this reason, I have stipulated very careful conditions for trading off the 1.6325 level: it has to be a really good bullish pin bar.
A sustained break below the bullish trend line, which right now sits at about 1.6365, will be a key technical development.