GBPUSD: Double bottom at 1.3081?
Yesterday’s signals were not triggered as there was no bullish price action when 1.3249 was reached and as the support level identified at 1.3081 was not hit 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 only.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3081, 1.3041, or 1.2972.
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 1.3136, 1.3175, or 1.3235.
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 technically, the support level at 1.3249 is very crucial – it is approximately the halfway point of Thursday’s move and is also a key psychological level (1.3250). If this level held it would probably signal the price would rise again by some amount tomorrow. I would be bearish after a couple of hours below it and bullish if it continued to hold up over the first few hours of the London session.
This was a great call as the price closed two hours below it early in the London session and is currently 90 pips lower, so acting on my call would have been profitable.
The price is now right back where it was when the original big rise towards the end of British voting last Thursday began, which is technically significant. There are signs that the price is holding up now from the support at 1.3081. There may be scope for a brave long trade here if that level continues to hold up, as volatility is likely to remain relatively high for the rest of this week.
There is a wild card though – British inflation data will be released later which could push the price anywhere. If the number is relatively high it would probably produce an up day today helped by the support at 1.3081, if it holds.
Concerning the GBP, there will be a release of CPI (inflation) data at 9:30am London time. There is nothing of high importance due today regarding the USD.