Yesterday’s signals produced a profitable short trade following the bearish break of the large bearish outside candlestick which rejected the resistance level at 1.2818 shortly after London opened. If the price can now get established above 1.2723 it would become wise to close out any remaining profitable part of this trade still open.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trades
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2723 or 1.2818.
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.
Long Trade
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2616.
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.
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
This pair is in a long-term bearish trend. The British Pound is currently one of the weakest of all major currencies, and the U.S. Dollar clearly the strongest. Therefore, it was not a surprise to see the price fall again significantly yesterday, to new 1-year lows. I had a bearish bias in the event of a failure to rise above the resistance level at 1.2818 and this was a very good call.
There is no reason to change today, although price action during the late Asian session is suggesting a bullish retracement, perhaps to 1.2723 or even higher such as the consolidation zone at about 1.2750.
I am looking for another short trade in this pair today but want to see this short-time rise reverse first.
Concerning the GBP, there will be a release of CPI data at 9:30am London time. Regarding the USD, there will be a release of Retail Sales data at 1:30pm and Crude Oil Inventories at 3:30pm.