GBP/USD: Pound becoming less weak?
Yesterday’s signals may have produced a losing short trade from the small pin candlestick which rejected the resistance levels at 1.2139. It is usually not a good idea to trade pin candlesticks when they are smaller in range than the last few preceding candlesticks.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered 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 1.2371 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 Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2139.
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 I would take a bearish bias if the price retraced to 1.2139 and makes a bearish price action reversal there. It did retrace to that level and print a small bearish pin candlestick but that was quickly broken to the upside, then we saw a fairly firm rise in the price.
Yesterday was all about a weaker USD and improving risk sentiment than about the Pound itself. The Pound still seems to be one of the relatively weaker “risk” currencies.
This means that the extent of any further rise is doubtful, and that this pair will probably be a good candidate for short trades when the USD eventually starts to get stronger again.
The price is now struggling to get established above the big quarter-number, confluent with resistance, at 1.2250. This will probably be today’s pivotal point.
I have no directional bias on this currency pair, so I am equally prepared to take a long trade from a bullish bounce at 1.2139 or a bearish reversal at 1.2371. The action around 1.2250 is a little messy so it looks hard to call a trade entry there.
There is nothing of high importance due today concerning the GBP. Regarding the USD, the Chair of the Federal Reserve will be testifying before the Senate at 3pm London time.