GBPUSD: Pound hits multi-month low price as Brexit looms
Last Thursday’s signals produced a profitable short trade from the bearish rejection of the resistance level at 1.2587.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken 5pm London time today.
Long Trade Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2429.
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 1.2562, 1.2587 or 1.2615.
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 last Thursday that the support at 1.2562 had held over the past day but looked likely to break down rather than continue to hold. When the price could close below 1.2562 for a couple of hours consecutively, I was ready to take a bearish bias, but I would be wary of a bullish reversal close to the big round number of 1.2500.
This was a perfect call as it predicted exactly what happened: the breakdown finally came on Friday but after a strong move down, support at and below the round number of 1.2500 pushed the price back up quite a long way. The odds today are in favour of another downwards movement, and if we do not get bearish action over the day it would indicate a medium-term bullish reversal is on the cards, so 1.2500 is very likely to be pivotal for this pair. I would take a bearish bias for at least a while if the price is below 1.2500 at 9am London time today.
There is nothing of high importance due today regarding the GBP or the USD.