GBP/USD: Likely to consolidate today between 1.2396 and 1.2484
Last Thursday’s signals were not triggered, as there was no bearish price action when the resistance level identified at 1.2571 was reached that day.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am and 5pm London time today.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2484 or 1.2571.
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 Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2396 or 1.2378.
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 last Thursday that I thought it still looked as if the price were more likely to rise than fall, so I would continue to look for long trades at bullish bounces at any key support level nearby.
However, I also noted that the day’s action may be somewhat hard to predict as the ECB’s monthly policy release might push the Pound around as well as the Euro.
This was a good call as I was correct on both issues, with the price rising strongly over the day.
The price has continued to sell off since last Thursday, as risk sentiment deteriorates as markets finally begin to grapple with the economic impact of the coronavirus pandemic. This has strengthened the Japanese Yen most of all, with the U.S. Dollar a close second, while riskier assets such as the British Pound have weakened.
This has created a more bearish technical picture, with the price well back within a recent zone of comfort between 1.2396 and 1.2484. I think that these levels will hold today, and we will see a consolidation of the price continuing between these two levels.
There is nothing of high importance due today concerning either the GBP or the USD.