GBP/USD: Bullish breakout from price channel looking very weak
Yesterday’s signals produced a profitable long trade from the strong bullish rejection of the support level identified at 1.2436. It would probably be wise to exit from any remainder of this position still held as the price action today is not looking convincingly bullish.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8 am and 5 pm London time today only.
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 we were likely to get a good bearish turn at the resistant confluence centered on 1.2504. However, I also noted the support level at 1.2436, and I was looking for a short trade only once the price got established below that support.
I was wrong on which direction to be looking for a trade-in, but I was correct about the importance of these levels, especially 1.2436, as it held and triggered a bullish movement which saw the price break out of its medium-term bearish price channel.
Although this breakout from the channel produces a more bullish technical picture, the bullishness is not convincing, and the short-term price action now suggests that the price is going to break back below 1.2500.
The British Pound remains relatively weak and despite risk-on sentiment mostly prevailing now, I would not look for a long trade here.
Again, I will be ready to take a bearish bias if we get two consecutive hourly closes below the support level at 1.2436.
There is nothing of high importance scheduled today regarding either the GBP or the USD.