GBP/USD: Room to fall to 1.2785
Last Thursday’s signals produced a profitable short trade from the bearish reversal at 1.3024.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered before 5pm London time today only.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2985.
Put the stop loss 1 pip above the recent 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 1.2785.
Put the stop loss 1 pip below the recent 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 last Thursday that I still saw the level at 1.2975 as pivotal and would again look for a short trade if we got two consecutive hourly closes below that level. I was also happy to take a short trade from a bearish reversal which may set up later at 1.3024.
This was a good, profitable, and accurate call.
The Pound is very bearish, selling off quite strongly as the London session gets underway, as markets digest the new lockdown announced by the British government as new coronavirus cases reach new highs. This will cause some economic damage and the Pound is taking a hit, more so than the Euro today so far. Meanwhile the U.S. Dollar is strong.
We are unlikely to see the price pull back to the nearest resistance level, so a better approach to trading this pair short today might be to just enter after short-term pullbacks fail. The price has plenty of room to fall quite a bit further, with no key support level in place above 1.2785.
There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be a release of ISM Manufacturing data at 3pm London time.