GBP/USD: Ascending Trend Line has Held
Yesterday’s signals were not triggered, as the bearish price action took place between the two nearest resistance levels.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8am and 5pm London time today only.
Short Trade Idea
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3033, 1.3037, or 1.3080.
- 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.
Long Trade Idea
- Go long following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2870.
- 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 the price looked set now to fall further and test the supportive ascending trend line. I was looking to take a short trade following a retracement to identified resistance levels nearby.
This didn’t work out, but it was a good call as the price did fall to test the ascending trend line, still visible in the price chart below, which held to the pip exactly and produced a bullish bounce.
The price is now in an interesting technical position, caught between the supportive trend line and two key resistance levels bunched close by.
I see the best approach today as either taking a long bias if the price can get established above those two resistance levels, or a bearish bias if it can get established below the ascending trend line.
Beware of the FOMC release. It will be a good idea to take risk off any open trade before that release comes.
Concerning the USD, there will be a release of the FOMC Statement and Federal Funds Rate at 7pm London time followed by the usual press conference half an hour later. There is nothing of high importance due today regarding the GBP.