GBP/USD: Pound is relatively strong
Yesterday’s signals were not triggered as none of the key levels were reached during yesterday’s London session.
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 1.2301 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 as it was notable that the British Pound was relatively firm, I was looking for a long trade from a more decisive bullish bounce off 1.2300 if we got it. The price did not reach that level yesterday, but I was on the right track, as the price has continued to look quite bullish and hold up above that level even though the USD has strengthened.
There is no reason not to keep yesterday’s cautiously bullish approach, except to note that the support at 1.2301 becomes more pivotal the longer it holds for, so a break below it would probably produce a meaningful fall. I think a good approach to trading this pair today will be to watch how the price behaves if and when it gets to 1.2300.
Technically I prefer a long trade from 1.2300 but I think the USD is likely to strengthen later once New York opens so a short trade following a sustained break below 1.2300 is likely to be the most profitable set up to watch out for.
There is nothing of high importance scheduled for today concerning the GBP. Regarding the USD, there will be a release of the ADP Non-Farm Employment Change data at 1:15pm London time, followed by ISM Manufacturing PMI numbers at 3pm.