GBPUSD: Pound weakens as new pro-Brexit administration imminent
Yesterday’s signals were not triggered, as the price action at 1.2606 was insufficiently bullish.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time today only.
Long Trade Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2568.
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.
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.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2615 or 1.2659.
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.
Take off 50% of the position as profit when the price reaches 20 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 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 continued to be strong, I thought that the price was likely to move down further. This was a good call, as it did. Movement is not very strong at the time of writing, but the indications are all bearish and for lower prices, as the former support just above 1.2600 breaks down. The Pound is one of the weakest currencies, but bears should note that the area between 1.2400 and 1.2600 has provided long-term support, so it may be that the price will struggle to get lower than that, at least not until the new British government takes over about three weeks from now.
I take a bearish bias on this currency pair today.
There is nothing of high importance due today regarding the GBP. Concerning the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time followed at 3pm by ISM Non-Manufacturing PMI data.