GBPUSD: More bearish below 1.2250
Last Thursday’s signals were not triggered, as there was no bearish price action at 1.2252.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered before 5pm London time today only.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2252 or 1.2169.
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 Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2364.
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 last Thursday that it was hard to say what would happen next as the (British) political situation was extremely fluid. I thought that technically, the price would be likely to fall from 1.2252, but that day it rose well beyond this level, so I was right to see political factors trumping the technical at least.
The political situation now is more stable, with the British Parliament having passed a law which should stop Brexit for at least several months and paralyse the British government. Parliament has also prevented a new election. It is likely that Parliament will be suspended tomorrow until just before the E.U. summit in mid-October.
It may be that the British Government will argue the new law is unconstitutional and will simply proceed with Brexit – but the situation is likely to be more stable until mid-October.
For this reason, I think we will get a period of consolidation in this currency pair now. Today’s pivotal point is clearly 1.2252 so it could be possible to trade this pair profitably today based upon whether the support there holds or breaks. I think it is more likely to break down.
Concerning the GBP, there will be a release of GDP and Manufacturing Production data at 9:30am London time. There is nothing of high importance due today regarding the USD.