GBP/USD: British Pound has residual strength despite selloff
Yesterday’s signals were not triggered, as when the support level at 1.2750 was first touched, there was no immediate bullish price action to give an entry signal.
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 1.2746 or 1.2842.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2624.
- 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 yesterday that the price had gotten established above the key psychological support level at 1.2750 and if it remained above that, it would suggest a further rise is due soon.
I was ready to take a long trade from a bounce at 1.2750 but only if this happened during the first half of the London session.
This was not a very useful call, but it was enough to keep out of trouble.
The USD has made a meaningful comeback against almost every currency during recent hours following yesterday’s FOMC release. The move was relatively strong here against the Pound.
There is evidence from the price action of recent hours that this bearish move has bottomed out, and the long-term bullish trend is being reasserted by the price moving in the same bullish direction over the short-term.
I think much will depend now upon whether the support level at 1.2624 continues to hold.
I will take a bullish bias if we get a bounce at that level following a further fall.
If the price does not retrace but quickly recovers to trade above 1.2750, I will also take a bullish bias if we get two consecutive hourly closes above that level.
There is nothing of high importance due today concerning either the GBP or the USD.