GBPUSD: Volatile on Brexit deal summit
Yesterday’s signals were not triggered as there was no appropriate price action at 1.2729 or 1.2828.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8am and 5pm London time today.
Long Trade Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2697.
Place 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 1.2924, 1.2970, or 1.3041.
Place 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 I expected to see the price rise over the coming days. For this reason, I would take a bullish bias if we got a strong bullish bounce after a retracement to the new support level at 1.2729. This level did not hold but I was correct about the price rising yesterday.
There was growing optimism yesterday that a Brexit deal which could pass through the British Parliament was about to be agreed. However, this morning has brought a feeling that the votes in the British Parliament are still not there to secure its passage, due mainly to Irish issues. This has caused a bearish retracement.
The price is highly likely to remain very volatile and to rise or fall dramatically today as the EU summit begins which is almost the last chance to agree a Brexit deal. As news emerges, the Pound will move a lot. If a deal is not agreed today, as currently seems likely, the price should fall. It is hard to see the EU making more concessions than they did yesterday.
There will be opportunities in this pair but be very careful. The best approach may be to fade short-term reversals after any spikes to extremes, monitoring short-term time frames very carefully.
Regarding the GBP, there will be a release of Retail Sales data at 9:30am London time. Concerning the USD, there will be a release of Philly Fed Manufacturing Index data at 1:30pm and Crude Oil Inventories at 4pm.