GBPUSD: Breaking to new lows below 1.2700
Yesterday’s signals were not triggered as the bullish price action took place just below the support level identified at 1.2697.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time today only.
Long Trade
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2618.
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.
Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Short Trade
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2828.
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.
Remove 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 there was again every reason to be bearish yesterday, but we were very close to a confluence of support and a round number at 1.2700 which was likely to be the day’s pivotal level. If the price closed below 1.2700 at 9am London time and above-average volatility, I would take a bearish bias – if not, I thought that we were more likely to see a bullish retracement over at least part of the London session.
This was a really good call, as although the price did get below 1.2700 there was no bearish momentum, and the area was pivotal as this failure to break lower did produce a sharp though limited bullish retracement.
The picture is more bearish now as the price seems to be breaking below the pivotal support at 1.2697 and heading down to make new 4-month lows.
The hapless UK government is still desperately trying to sell some Brexit compromise which its own legislators are not even buying. This political mess is helping to weaken the Pound.
A note of caution lies in the fact that there are high profile releases due for both currencies today, but again, if the price is firmly below 1.2697 at 9am London time I will take a bearish bias today.
Regarding the GBP, there will be Inflation Report Hearings and CPI (inflation) data at 9:30am London time. Concerning the USD, there will be a release of FOMC Meeting Minutes at 7pm.