GBPUSD: Bearish reversal above 1.2500
Last Thursday’s signals were not triggered, as the price did not quite reach 1.2562 during that day’s London session.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered before 5pm London time today only.
Long Trade Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2393.
Put 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 1.2517, 1.2562, 1.2587, or 1.2615.
Put 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 if the Bank of England had given a bullish surprise, we could see a technically significant bullish breakout above this very long-term pivotal area which stretched from 1.2500 to approximately 1.2560. The price did advance to that area but fell back quite strongly, and this was a pivotal moment as the price has been broadly moving down ever since. This tells us that the area above 1.2560 I very important.
The Pound looks a little weak this morning, although there is probably minor support at about 1.2450, and then stronger support below that at about 1.2393 but perhaps 1.2400 will be felt as the round number.
If the price spends some time below 1.2450 today, especially during the first half of the London session, I think it will be likely to continue to fall to at least 1.2400.
There is nothing of high importance due today concerning either the GBP or the USD.