Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered before 5pm London time today only.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3024 or 1.3115.
- Place the stop loss 1 pip above the recent 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 1.2975.
- Place the stop loss 1 pip below the recent 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 there was a clear pivotal area of support whose lower end was defined at about 1.2975. As there were no clear support levels below that, if we had gotten two hourly closes below that level, I was ready to take a bearish bias.
We did get two consecutive hourly closes below that level, and an entry from there would have given about 40 pips of profit before it reversed so this could have been a good trade if managed carefully. However, the price then rose to get well back up above 1.2975, so if the trade had been left it probably would have been a loser.
We are seeing stronger risk-off market sentiment as the coronavirus spreads exponentially in the Eurozone and the U.S. and in the world as a whole, with new lockdowns announced yesterday in France and Germany. This has impacted the Euro, but the Pound is holding up better. Nevertheless, the U.S. Dollar is strengthening as a safe haven.
I still see this level at 1.2975 as pivotal and would again look for a short trade if we get two consecutive hourly closes above that level. I am also happy to take a short trade from a bearish reversal which may set up later at 1.3024.
Overall, I would prefer to be short of the Euro than the Pound against the U.S. Dollar, so trading the EUR/USD may be a better vehicle for exploiting these developments today – although we have major data releases for both of those currencies which could make things unpredictable there.
Regarding the USD, there will be a release of Advance GDP data at 12:30pm London time. There is nothing of high importance due today concerning the GBP.