GBP/USD: Price rejected big round number at 1.3000
Yesterday’s signals were not triggered, as there was no bearish price action at 1.2923 or 1.2975.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken 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 1.3023 or 1.3079.
- 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 1.2913.
- 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 I expected the consolidation below 1.2923 would probably continue until the FOMC release later. However, there was some bullish pressure building up against this resistance level so a pop above 1.2923 was quite possible.
This was an OK call as we did get the pop above 1.2923 and I was right to see it as a possibility; however, I was also right to be skeptical about it as the price turned around quickly after getting close to 1.3000.
The price chart below shows that there is just a little strength in the Pound right now despite the general rebound we have seen in risk currencies against the USD over the past few hours.
It is clear that the support level at 1.2913 is the obvious and most likely pivotal point.
If the USD picks up some momentum again later and the price gets established below 1.2913, we could see a much stronger fall by a hundred pips or so.
Therefore, I will be happy to take a bearish bias if we get two consecutive hourly closes below 1.2913 later today. If they are below 1.2900 also, that will be even better as we then see bears overcoming a potentially supportive round number too. However, this has to happen after the Bank of England’s important release due later.
Regarding the GBP, there will be a release of the Bank of England’s Monetary Policy Summary, Official Bank Rate, and Votes. There is nothing of high importance scheduled today concerning the USD.