GBPUSD: new 4-month lows below 1.2700
Yesterday’s signals were not triggered, as none of the key levels were ever reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 5pm London time today.
Long Trade
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2618.
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.
Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
Short Trade
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2694.
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.
Take off 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 the picture had become more bearish now as the price seemed to be breaking below the pivotal support at 1.2697 and heading down to make new 4-month lows.
I said that if the price was firmly below 1.2697 at 9am London time I would take a bearish bias.
This was a good call as the price was below that level at that time and has fallen by another 35 pips since then.
There is every reason to be bearish as the governing Conservative Party in the UK heads for a probable historic defeat at the European Parliamentary elections today, which polls suggest will be won by the Brexit Party. The current government is seen as close to collapse. This uncertainty, especially over Brexit, is weakening the Pound, which is falling every day to new multi-month lows.
If the price closes below 1.2618 at 9am London time, or for a couple of hours consecutively after that, I would take a bearish bias on this pair today.
If the Prime Minister does resign, there could be sharp volatility in both directions as the market tries to calculate whom the likely successor will be and what policy they will pursue on Brexit.
There is nothing of high importance due today concerning either the GBP or the USD, but key political announcements in the U.K. might happen.