By: DailyForex.com
Last Thursday’s signals were not triggered, as although the price did reverse at the resistance level identified at 1.4250, it did not happen until the end of the London session.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trade
* Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.4330.
* Place the stop loss 1 pip above the local swing high.
* Move the stop loss to break even once the trade is 25 pips in profit.
* Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Long Trades
* Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.4221 or 1.4118.
* Place the stop loss 1 pip below the local swing low.
* Move the stop loss to break even once the trade is 25 pips in profit.
* Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
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
Last Thursday, I wrote that I was maintaining a bullish bias on this pair, which continued to look like the best instrument to use for shorting the U.S. Dollar. There were no key resistance levels for a long way above, yet the level at 1.4250 could provide resistance as there was a key swing high there some days ago, and because it is a key psychological level. This turned out to be an accurate analysis, as the price did continue to rise, and was halted that day temporarily at 1.4250. The price rose further on Friday, before pulling back. There is new support at 1.4221.
We now have a bearish pull back, but so far it looks like nothing more than a retracement with a relatively strong and long-term bullish trend. The British Pound has the greatest long-term strength of all the major currencies, and is also advancing against the Euro, which is a bullish sign. I see no reason yet to change from having a bullish bias on this pair, with the support at 1.4221 looking especially attractive.
There is nothing due today concerning the GBP. Regarding the USD, there will be a release of Retail Sales data at 1:30pm London time.