GBPUSD: Bulls challenging key 1.2500 area
Yesterday’s signals produced a profitable long trade from the bullish rejection of the key support level at 1.2393, which held precisely to the pip.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered before 5pm London time today only.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2455 or 1.2393.
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 yesterday that I saw 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.
However, I also suggested a potential scalp or maybe even a swing trade if we got a bullish bounce at 1.2393, and it was this latter scenario which played out successfully.
The price is looking generally bullish over the medium and short terms and seems to be threatening the 1.2500 level which is the start of a strong area of long-term resistance. This is an interesting pair to watch right now. I would still prefer to take a long trade from support than any short trade.
Concerning the GBP, there will be a release of CPI (inflation) data at 9:30am London time. Regarding the USD, there will be a release of Crude Oil Inventories at 3:30pm, followed by the FOMC Statement, Federal Funds Rate, and Projections at 7pm, followed by a press conference half an hour later.