GBP/USD: Pound showing strength but uncertain technical picture
Yesterday’s signals were not triggered, as the bearish price action took place above the resistance levels which were reached over the past day.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8am and 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 the trend line shown in the price chart below which is currently sitting at about 1.3233, 1.3286, or 1.3305.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3180, 1.3115 or 1.3079.
- 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 yesterday that the price action still looked messy and unpredictable, but there did seem to be some short-term strength in the British Pound compared to other currencies.
However, the action just looked too unpredictable for me to be trading this currency pair.
I should have had more faith in the short-term strength in the Pound, as the price moved up here yesterday and invalidated several resistance levels.
The price chart below shows a very mixed technical picture: although we have continuous buying just above 1.3000, we can see that the price is actually contained within a wide, very weakly bearish price channel.
It may be that we have already seen the turn from bullish to bearish price action and the upper trend line of this price channel will not be touched any time soon. Yet if it is reached and we get another turn there, I think it could be a good short trade entry opportunity.
Much of the action later today will probably depend upon what we will hear from representatives of the Federal Reserve at that Jackson Hole Symposium later today.
If the price can break up above 1.3305 and hold up there, that would be a very bullish sign and take the price of this pair into blue sky with new long-term highs.
There is nothing of high importance due today regarding the GBP. Concerning the USD, the Chair of the Federal Reserve will be giving a minor speech at 2:10pm London time, as the Jackson Hole Symposium gets underway.