GBP/USD: More bearish below 1.2378
Yesterday’s signals were not triggered, as there was insufficiently bearish price action when 1.2484 was first reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8am and 5pm London time today.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2396.
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 1.2304.
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 the support and resistance levels identified at 1.2396 to 1.2484 would hold over the day. This was a correct and good call as the high of the day was at 1.2484 to the exact pip.
The picture now is looking more bearish as the price breaks strongly below the support level at 1.2396 which had seemed strong. However, the price may not be able to get established below the next support level at 1.2378, and this level at 1.2378 is the one to watch today. If we get a couple of consecutive hourly closes below that level, I would take a bearish bias here today if it happens before the major U.S. data forecast release due later, which might push the price around if the number is a big surprise.
Concerning the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time. Regarding the GBP, there is nothing of high importance scheduled for today.