GBP/USD: Trading above key round number at 1.2500
Yesterday’s signals were not triggered, as there was insufficiently bearish price action when the resistance level identified at 1.2484 was first reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 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 1.2571 or 1.2624.
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.
Remove 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 1.2371.
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.
Remove 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 the odds remained in favour of still higher prices, especially if the price could get established above the upper trend line 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.
This was a great call as it reflected exactly what happened. We are seeing a strong rise in the price to above the major round number at 1.2500 and an invalidation of the former resistance at 1.2484 as the price breaks bullishly out of its ascending price channel.
The Pound has less long-term strength than the Euro but is outperforming the Euro today.
The short-term price action at the London open suggests that the resistance overhead at 1.2571 is likely to hold, at least for a few hours, with a bullish consolidation looking the most likely scenario for the first half of the London session.
The price is quite far from the nearest key support level at 1.2371, but the broken upper trend line of the former price channel would, if extended, currently sit at about 1.2450, so a bullish bounce there following a bearish retracement could be the right entry for a long trade today, if it sets up, targeting the next key resistance level at 1.2571.
There is nothing of high importance due today concerning either the GBP or the USD.