GBPUSD: Pound weak against resurgent Dollar
Yesterday’s signals were not triggered, as there was insufficiently bullish price action at 1.2639.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 5pm London time today.
Long Trades
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2610, 1.2606, or 1.2568.
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.
Short Trade
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2659.
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 20 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 lower prices looked likely today over the short term as the Dollar strengthened, but there was a lot of long-term support below which may hold until the new British Prime Minister takes office in about 3 weeks’ time. If the price fell quite strongly between 8am and 9am London time, I would take a bearish bias until 1.2639. This was a good call as the price did fall at that time and continued downwards to reach 1.2639 and a little further below that.
The Pound is relatively weak and betting markets are putting an 89% probability on the pro-Brexit Boris Johnson becoming the next Prime Minister in a few weeks, and he is seen as prepared to leave the European Union without a deal at the end of October, which is tending to weaken the Pound.
If the Dollar continues to be strong today, the price is likely to move down further. However, technically, the area between 1.2500 and 1.2600 has acted as strong support, so it may be difficult for the price to move a great deal lower any time soon.
I would take a bearish bias if the price can make a firm bearish reversal following a retrace to 1.2659.
There is nothing of high importance due today regarding either the GBP or the USD.