Yesterday’s signals produced a losing short trade following the false bearish inside candle break which occurred when the price hit the resistance level which I identified yesterday at 1.2536.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered before 5pm London time today only.
Short Trades
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2673 or the descending trend line which currently sits at about 1.2762 which is shown in the price chart below.
Place 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 Trades
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of the broken bearish trend line below the current price now sitting at about 1.2600 as shown in the price chart below, or 1.2364.
Place 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
I wrote yesterday that there was no reason why we would not see lower prices still over the short-term and I thought it made sense to take a generally bearish bias on the British Pound. As it happened, there was such a reason, which emerged a little after the time of writing, which was the vote of no confidence in the British Prime Minister which was triggered my some of her own party’s Members of Parliament. As a consensus quickly emerged that she would survive the vote, the British Pound rose quite strongly, breaking up past resistance and continuing to challenge the higher resistance level at 1.2673. Another bullish sign is that the broken trend line now seems to be acting as support at about 1.2600, which can be seen in the price chart below.
Although the Prime Minister won the confidence vote, her position and the Brexit situation really has not changed. Volatility is likely to remain high and there is a long-term weakness in the Pound, but if the government succeeds in running out the clock on Brexit, it should be able to get Parliament to vote for the deal on offer, even if that does not happen until the last minute. Once that happens, I expect the British Pound to rise sharply.
I would still take a short-term bearish bias here but only once there was a clear failure to rise above key resistance with a strong reversal.
There is nothing important due today concerning either the GBP or the USD.