GBP/USD: Pound surprisingly strong
Yesterday’s signals were not triggered, as there was no bearish price action when the resistance level identified at 1.2859 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
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2920 or 1.2952.
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 Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2859.
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 British Pound was generally weak, so as long as 1.2859 continued to hold as resistance, I kept a generally bearish bias. I think this was the correct approach but we have had a bullish surprise, with the price breaking up above the pivotal point at 1.2859, and the Pound is being bought to the point where it looks like it could be the strongest currency today.
There is a lot of resistance between 1.2900 and about 1.2960, including a major bearish trend line, so the price is likely to struggle to get much higher. The technical picture suggests we will now see choppy price action as bulls defend 1.2859 and bears defend 1.2900 and above. I take no directional bias today and prefer to stand aside on this pair for the time being. Traders determined to trade this pair today are probably best off scalping any bounces rejecting key levels.
Concerning the GBP, the Governor of the Bank of England will be giving a minor speech at 5pm London time. There is nothing of high importance due today regarding the USD.