GBP/USD: Picture would be much more bullish above 1.2550
Last Thursday’s signals were not triggered as there was insufficiently bearish price action at any of the key levels which were 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 1.2613.
- 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 Ideas
- Long entry following a bullish price action reversal on the 1H1 time frame immediately upon the next touch of 1.2488, 1.2437, or 1.2406.
- 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 last Thursday that I thought bears could have some success going short from a firm bearish reversal which may set up from a rejection of the resistance level at 1.2400, as this was confluent with the upper trend line of the long-term bearish price channel shown in the chart below. Alternatively, a break above 1.2465 would be a big surprise and would definitely signal a considerably more bullish technical picture if it happens.
We got the bullish breakout above 1.2465 so the technical picture is now much more bullish as the price has broken out of the long-term bearish channel which was containing it. It initially appeared that 1.2400 would hold but after the price failed to break down after the first hourly inside candlestick, the breakout became more likely.
The technical picture is bullish, but the advance is slow. Bulls really need to clear 1.2550 to get the price moving, so I will only take a bullish bias today if we get two consecutive hourly closes above that level. A bullish bounce at 1.2437 which looks likely to be strong support could also signal a good long trade entry.
There is nothing of high importance scheduled today regarding the GBP. Concerning the USD, there will be a release of ISM Non-Manufacturing PMI data at 3 pm London time.