GBP/USD: Descending trend line
Yesterday’s signals were not triggered, as there was no bearish price action when the resistance level at 1.3012 was reached, and the bullish price action unfortunately took place just below 1.2980.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3006 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.
Take off 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 Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2942.
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.
Take off 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 as this currency pair was showing a very evenly balanced technical picture with a few key levels near to the current price, the price was very likely to range over the day. This was a good call, as the price swung up and down and has ended up approximately where it was 24 hours ago.
The British Pound is holding up relatively well against a strong U.S. Dollar, but even here we are seeing a more bearish technical picture, with a descending trend line connecting the highs and applying some downwards pressure on the price. Note also that the price is again trading at or below the big round number at 1.3000 and we can again draw a horizontal resistance level above the current price which is confluent with it.
All else remaining equal, we have a weakly bullish technical picture, but we also have major news releases due today for both currencies which might push the price anywhere, twice – so predicting the price today is not likely to be fruitful. A better approach would probably be to trade any convincing price action reversal after a directional spike in price following one of the two major data releases.
Regarding the GBP, there will be a release of CPI (inflation) data at 9:30am London time. Concerning the USD, there will be a release of FOMC Meeting Minutes at 7pm.