GBP/USD: Yet 1.2500 supportive area may produce bullish reversal
Yesterday’s signals were not triggered, as there was no bullish price action when the support level identified at 1.2582 was reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8 am and 5 pm 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 1.2582 or 1.2625.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2520 or 1.2437.
- 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 if the price could not get established above 1.2670 today, there would be an increasing chance of a deeper bearish retracement, and we may see the price hit 1.2582 later.
This was a good call as the price did fail near 1.2670 and descending to reach not only 1.2582 but has continued down even further and is now testing the next support level at 1.2520.
This support at 1.2520 could be strong because it is relatively confluent with the big round number at 1.2500 and as such is a natural area of support, which is holding up after being tested for a few hours, including the opening part of the London session.
The British Pound is a relatively weak currency today, but in the absence of any major news or fundamental drivers, given the overall ranging environment in this Forex pair, we may well see a bullish reversal here.
I will take a long trade if we get a firmly bullish hourly candlestick soon rejecting 1.2520 and ideally also 1.2500, which closes above 1.2540.
There is nothing of high importance scheduled today regarding either the USD or the GBP.