GBP/USD: Bearish below 1.2870
Yesterday’s signals were not triggered, as there was no bullish price action when the support level identified at 1.2953 was reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered before 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2952 or 1.3016.
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
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2886 or 1.2870.
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 the key thing to watch for was whether the bulls could keep the price up from the 1.2950 area. Even below that, we might see support later at about 1.2925.
This was a good call as the 1.2950 area was pivotal, with the price continuing to fall once it broke below this area. We have new support right there now, at 1.2952.
Trend lines can be redrawn now, as shown in the price chart below, to reveal that we are again in a consolidating triangle pattern, suggesting a lack of direction. However, this is somewhat misleading, because we are actually close to multi-month lows and the support at 1.2870 is very key. If the price can break down below this triangle and 1.2870, that would be a very bearish sign. However, if the level holds, it could be a long-term bottom. So, it is worth keeping an eye on this pair as we seem to be getting closer to a decisive technical development depending upon what happens around 1.2870.
I take no directional bias for the time being but would take a long trade at a firm bullish bounce at 1.2870 if it happens later.
There is nothing of high importance due today regarding either the GBP or the USD.