GBP/USD: Remains bullish above 1.3271
Last Thursday’s signals were not triggered, as unfortunately the bullish price action took place a few pips below the support level identified at 1.2244.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time only.
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.
Take off 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 1.2371 or 1.2285.
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.
Take off 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 although we had a bullish price channel holding, we also saw a major lower high formed by recent price action as well as new lower resistance at 1.2296. These were mixed signs, so I was looking for a cautious long trade from a bullish bounce at about 1.2208, which never set up, due to the supportive confluence in that area.
The USD remains weak everywhere, so the GBP is of course advancing against it, but notably less strongly than the Euro and the Australian Dollar have.
While the EUR/USD broke upwards out of its bullish ascending price channel, the price channel has held quite precisely here so far.
The odds remains in favour of still higher prices in this currency pair, but if the nearby support at 1.2371 breaks down, that would likely produce a slightly bearish consolidation back down into the middle of the price channel which is shown in the chart below. On the other hand, if the price can get established above the upper trend line, which is currently sitting at about 1.2427, that would be a bullish sign and would probably see the price rise to test the next resistance level which is at 1.2484.
There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.