Yesterday’s signals may have been triggered, as the price action at 1.2616 was just a little high for comfort, but being a little flexible there would have caught the best trade of the day in a short direction.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trades
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2536 or 1.2616.
Put 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
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2429, 1.2388, or 1.2364.
Put 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
I wrote yesterday that the price may well stabilize now, but there was still potential for further downwards movement. There may be support at the round number of 1.2500 before the support level I identified at 1.2429. I would take a bearish bias if there were strong reversals following a retracement to either of the resistance levels marked above the current price in the chart below.
We got this, at 1.2616 which was also a broken trend line retested from the other direction. The price struggled to rise there for a few hours and printed some really bearish price action on the short-term charts. The price has made new 18-month lows below the psychological level of 1.2500, which is a bearish sign. There is a lot of political uncertainty and a mood not far off panic among the political class in the U.K. with many members of Parliament feeling they have a better chance of overturning the referendum result, as well as the Prime Minister’s position becoming much more threatened. There is no reason why we will not see the lower prices still over the short-term and it makes sense to take a generally bearish bias on the British Pound now. I would again take a bearish bias after any bearish reversals at resistance levels.
There is nothing important due today concerning the GBP. Regarding the USD, there will be a release of CPI data at 1:30pm London time.