GBP/USD: Moving in big swings
Yesterday’s signals were not triggered, as neither of the key levels were reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2363 or 1.2484.
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 Ideas
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 as the price was moving in large swings and as there was a large space between the nearest support and resistance levels, this consolidation period was likely to be relatively lengthy and the action would probably get messy before it breaks out too.
This was a relatively good call as the price has continued to consolidate, although the price action has printed new lower resistance at 1.2363 which makes the picture a little more bearish.
Due to the renewed strength in the U.S. Dollar and weakness in European currencies such as the British Pound, I would be prepared to take a bearish bias today if we get a price action reversal at 1.2363, but if the price can get established above that level following a break, the outlook would become a little more bullish.
There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be a release of CPI (inflation) data at 1:30pm London time.