GBP/USD: Testing key round number at 1.2600
Yesterday’s signals were not triggered, as the price action when 1.2571 was first reached was not sufficiently bearish.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken prior to 5pm London time today.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2624 or 1.2704.
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 Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2571.
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 resistance overhead at 1.2571 was 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.
This was a great call as it described perfectly what happened yesterday as 1.2571 held until about the time the Asian session began, when it broke to the upside.
The USD is weak everywhere and the British Pound is finally beginning to catch up with the Euro in terms of strength, although the Euro is definitely showing greater long-term strength than the Pound is.
The price is not far from the resistance level at 1.2624 but the signs are generally bullish, so the price is a bit more likely to rise than fall today.
I will take a bullish bias if we get a retracement to the new likely support level at 1.2571 and we see a bullish bounce there right away.
There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be a release of the ADP Non-Farm Employment Change at 1:15pm London time followed by ISM Non-Manufacturing PMI data at 3pm.