GBP/USD: USD is strong on depression fears
Yesterday’s signals were not triggered, as none of the key levels were reached before 5pm London time.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered prior to 5pm London time today only.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2420.
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 25 pips in profit and leave the remainder of the position to ride.
Long Trade Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2252.
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 25 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 if the price could break with strong momentum above 1.2520, it could hit the next resistance at 1.2570 quite quickly. I also thought that it was likely that the price would reach 1.2520 during the London session, so I took a bullish bias at prices down to 1.2411.
I was right about the first item, but wrong to be bullish as the price mostly sold off, and in recent hours has broken below the former support level at 1.2411. We can adjust this to a new key resistance level at 1.2419, and the price has plenty of room to fall as there is no obvious support level until 1.2252, although the round number at 1.2300 may well provide some support if it is reached soon.
Global markets are being subject to more “risk off” sentiment today, as stock markets are falling on increased fear following yesterday’s wild crude oil selloff, and the Japanese Yen and U.S. Dollar are clearly the strongest currencies while more risky assets such as the British Pound suffer.
Both the technical and the sentiment are boosting the bearish case as long as the price remains below 1.2419 or, especially, 1.2400 – so I take a bearish bias here below 1.2400.
There is nothing of high importance due today concerning either the GBP or the USD.