Yesterday’s signals may have produced a losing short trade following the bearish rejection of the resistance level identified at 1.2831 by an engulfing candle on the 1 hour chart.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time today only.
Long Trade 1
· Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2916.
· Put the stop loss 1 pip below the local swing low.
· Adjust the stop loss to break even once the trade is 25 pips in profit.
· Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
Short Trade 1
· Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3074.
· Put the stop loss 1 pip above the local swing high.
· Adjust the stop loss to break even once the trade is 25 pips in profit.
· Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
GBP/USD Analysis
The Governor of the Bank of England made public comments yesterday which were interpreted as a shift in his support for a rate hike later this year. Only last week, he had made other remarks which were interpreted as meaning the exact opposite. This has led the market to buy the British Pound strongly as the era of cheap money in the U.K. seems to be coming to an end, as it is in most major economies. The price has risen through two major resistance levels, which now look to have flipped to become support, and the price now is where it was when the British government seemed to be assured of a landslide re-election. The big round number above at 1.3000 is very important psychologically, as there has been a slow but long-term recovery in the Pound since the aftermath of Brexit, and a break above that level would be a bullish sign for the Pound.
The outlook and trend is bullish, but it should be remembered that the Euro typically moves with greater duration than the Pound does. On the other hand, the fact that the Euro has also been boosted and should continue to be bullish, is another factor that should continue to boost the British Pound.
There is nothing due today concerning the GBP. Regarding the USD, there will be a release of Final GDP and Unemployment Claims data at 1:30pm London time.