GBPUSD: Major bearish reversal from 1.2500?
Yesterday’s signals were not triggered, as there was no bullish price action at 1.2444 and insufficiently bullish price action at 1.2424.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8am and 5pm London time today.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2393 or 1.2288.
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 Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2455.
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 there was more room for the price to rise before any resistance was hit and it seemed markets were taking the view that Brexit would either be cancelled, postponed, or subject to something close to the deal the E.U. has already offered to the U.K.
In fact, the price has been falling quite consistently, although fortunately there were no false reversals at any of my resistance levels, so paying attention to these was enough to keep traders looking for long entries out of trouble.
The pace of the downwards movement has slowed, hinting that the price might now bottom out just above 1.2393. I see the most significant development as being the fact that the price recently hit a major round number at 1.2500 and has been selling off ever since, suggesting we may have an important medium-term bearish reversal there.
On the other hand, the price here is very dependent upon political developments in the U.K. and the E.U. concerning Brexit.
I see a potential scalp or maybe even a swing trade if we get a bullish bounce at 1.2393 later today.
There is nothing of high importance due today concerning either the GBP or USD.