GBP/USD: U.K. coronavirus strategy reversal in focus
Yesterday’s signals were not triggered, as there was insufficiently bullish price action when the support level at 1.2250 was reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2515, 1.2624, or 1.2704.
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 1.2139, 1.1905, or 1.1800.
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 I thought the support level 1.2250 would be very pivotal. If the price could get established below it, I thought that it was likely to start falling more strongly. I was wrong about the impact of this level, at least in intensity. It held until about the end of the London session before gently breaking down and becoming invalidated, but my call was at least good enough to keep anyone out of trouble.
The price action is bearish, and it is notable that unlike most major non-commodity currencies which are stabilizing, the Pound still looks like it will fall further. This may be due to the fact that the British government has indicated that coronavirus cases are likely to rise dramatically, especially in London. There is increased speculation today that the government realised their coronavirus strategy was too dangerous so they are more aggressively pushing distancing measures, although mandated closures as have already been seen in many other European nations have not yet been implemented, and schools remain open for the time being.
As the U.S. Dollar is broadly strong, I am bearish on this currency pair today below 1.2250.
There is nothing of high importance scheduled today regarding the GBP. Concerning the USD, there will be a release of Retail Sales data at 12:30pm London time.