GBP/USD: Significant recovery by Pound
Last Thursday’s signals were not triggered as there was insufficiently bearish price action at 1.1997 or 1.2139.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time today only.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2515, 1.2624, or 1.2704.
Place 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 ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3211 or 1.2139.
Place 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 20 pips in profit and leave the remainder of the position to ride.
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 despite the news items, I thought that it was likely that the resistance at 1.2000 would hold even if it was briefly exceeded by the price action. This was a poor call, as the price broke above the 1.2000 level and went on to rise very strongly, to the point where the price even got close to the next big figure at 1.2500.
The technical picture is now considerably more bullish as the USD has continued to retreat. After making huge losses the Pound has really bounced back even though the U.K. appears to be heading for an Italian-style coronavirus scenario, with the Government predicting social distancing measures may need to remain in place for the next 6 months in the U.K.
The outlook is bullish, but with no major news scheduled today and resistance near 1.2500 which is likely to be strong, we will probably see the price consolidate for a while between 1.2311 and 1.2500. A long trade from a bounce at 1.2311 until 1.2500 will look attractive if it sets up.
There is nothing of high importance scheduled for today concerning either the GBP or the USD.