GBP/USD: Pound gains against Euro
Yesterday’s signals were not triggered, as there was insufficiently bearish price action at 1.2748.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken between 8am and 5pm 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 1.2779 or 1.2871.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2650, 1.2624, or 1.2575.
- 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 there was every reason to be bearish, except the price was approaching a cluster of key support levels starting at 1.2650, so the price could struggle to get much lower than 1.2650. I saw the opportunity as likely to arise on shorter time frames day trading a move down to 1.2650.
This was not a great call as the price actually stabilized over the past day, seeming to find a floor at or a little below the round number at 1.2700.
One interesting development has been that the Pound actually rose against the Euro for the first time in a while, although only by a little. Yet this is another sign that we may be getting firm support here below 1.2700. Of course, as the price chart below shows, there is a cluster of support levels at and below 1.2650 which I wrote yesterday would be likely to be firm, so they may be starting to make their presence felt.
The best I can say is that the support at 1.2650 looks likely to be very strong, as does the resistance at 1.2871. So, I will be happy to trade a reversal bounce off either of those levels.
Regarding the GBP, there is nothing of high importance due today. Concerning the USD, the Chair of the Federal Reserve and the Treasury Secretary will be testifying before Congress at 3pm London time.