GBP/USD: Support at 1.2252 looks strong
Yesterday’s signals produced an excellent and very profitable short trade from the bearish outside candlestick on the hourly chart which rejected the resistance level at 1.2420. The price then fell strongly all the way to the next support level identified at 1.2252, although that came too late in the day to produce a long trade entry.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 5pm London time today.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2420.
Put the stop loss 1 pip above the local swing high.
Move 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 25 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 1.2252.
Put the stop loss 1 pip below the local swing low.
Move 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 25 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 price had plenty of room to fall as there was no obvious support level until 1.2252, and I took a bearish bias below 1.2400. I also identified the key resistance level at 1.2420. Overall, this was a perfect call, with the price even finding support right at the nearest support level I identified, at 1.2252.
We now see the price making a bullish retracement and rising from its stabilization above 1.2252, with all risk assets gaining against the USD in today’s trading so far as at the time of writing. I do not think this situation will persist, so I would be prepared to take another short trade at 1.2420 if the price gets back to that level and then makes a bearish turn if this level continues to hold as resistance.
There is nothing of high importance due today concerning either the GBP or the USD.