GBPUSD: Consolidation 1.2252 / 1.2393
Yesterday’s signals were not triggered, as none of the key levels have been reached yet.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8am and 5pm London time today.
Long Trade Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2252.
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 Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2393 or 1.2424 or 1.2444.
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 as we had a bullish consolidation, I would still only look to take long trades, but the price was a long way from any key support levels at which to find an entry. I was ready to take a bullish bias if we get a solid bounce following a retracement to the support level at 1.2252. This was enough to stay out of trouble, at least.
The consolidation has continued. However, we will later get U.S. inflation data which could cause unpredictable directional movement, hence the consolidation ahead of that. I am somewhat less bullish, seeing rejections of either resistance or support nearby as equally potentially good trade opportunities, at relatively conservative profit targets.
Regarding the USD, there will be a release of CPI (inflation) data at 1:30pm London time. There is nothing of high importance due today concerning the GBP.