GBPUSD: Pound hit new 17-month highs after British election
Last Thursday’s signals were not triggered as the bullish price action at 1.3081 did not take place until after 5pm London time.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered 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 1.3356 or 1.3249.
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 Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3521.
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 last Thursday that the better the Conservatives performed in the British election results, the more the Pound should rise. I thought that the Conservatives would get a majority and so I was bullish. This is a great call as towards the end of the day the price began to rise after dipping following rumours of strong turnout in London. Upon the release of the exit poll the price made a huge upwards movement within minutes, reaching a new 17-month high above the psychological round number at 1.3500. The price has since sold off gradually from that peak.
The initial bullish movement has probably played out already, and I expect today will most likely be a down day, but perhaps not by much. I expect it would be best to wait and see what happens today. If the price ends the New York session above 1.3329 that would be a bullish sign; above 1.3356 would be even more bullish. For now, it might be best to stand aside, unless the just want to trade the swings within the high volatility on short time frames.
Regarding the GBP, there will be a release of Flash Manufacturing & Services PMIs at 9:30am London time, followed by Bank Stress Test results at 4pm. Concerning the USD, there will be a release of Flash Manufacturing PMI data at 2:45pm.