GBPUSD: Bulls still challenging key 1.2500 area
Yesterday’s signals were not triggered as there was no bullish price action at 1.2455.
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 Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2562, 1.2587, or 1.2615.
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 the price was looking generally bullish over the medium and short terms and seemed to be threatening the 1.2500 level which is the start of a strong area of long-term resistance. I would still prefer to take a long trade from support than any short trade.
This was a good call as although the price initially fell a little it has bounced back to continue to challenge the multi-week highs around the psychologically important 1.2500 level. The broadly bullish picture continues.
We have the monthly Bank of England guidance due today and this is likely to push the price in an unpredictable direction and cause a spike in volatility. If there is any bullish surprise, we could see a technically significant bullish breakout above this very long-term pivotal area which stretches from 1.2500 to approximately 1.2560. If the day closes above that price, it would be a very bullish sign for the Pound, and I would take a bullish bias on this currency pair.
Concerning the GBP, there will be a release of Retail Sales data at 9:30am London time, followed by the Bank of England’s Monetary Policy Summary, Official Bank Rate, and Rate Votes at Noon. Regarding the USD, there will be a release of Philly Fed Manufacturing Index data at 1:30pm.