GBP/USD: Bulls and bears fighting over price channel
Yesterday’s signals were not triggered as there was no bearish price action when the resistance level identified at 1.2456 was first reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5 pm 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 1.2504 or 1.2613.
- 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 1.2436.
- 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 due to the medium-term bearish trend, I was ready to take a short trade following a bearish reversal at 1.2456 if we had gotten it later.
This trade did not set up, so my call was at least enough to stay out of trouble.
We are in a much more significant and interesting technical position now, as we have a confluence of a horizontal resistance level at 1.2504, a very major round number and psychological level at 1.2500, and the upper trend line of the intact bearish price channel which is shown in the chart below.
This resistant confluence is a very obvious place to look for a short trade if there is a bearish turn there in the price action later.
The problem for bears is that there is also support at 1.2436. However, the Pound is a relatively weak currency, so I am interested in taking a short trade if we get two consecutive hourly closes below 1.2436 later today, the earlier the better.
There is nothing of high importance scheduled today regarding either the GBP or the USD.