Last Tuesday’s GBP/USD signal produced a profitable long trade from the bullish bounce at the support level identified at 1.3551, giving a maximum of approximately 75 pips of profit.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must 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 1.3667 or 1.3759.
- Place the stop loss 1 pip above the local swing high.
- Move the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3551, 1.3527, or 1.3437.
- Place the stop loss 1 pip below the local swing low.
- Move the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the price reaches 20 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 Tuesday that the long-term bullish trend did not appear to have been significantly impacted by the day’s fall in price, and the short-term price action suggested that the price was poised to move higher over the coming days.
I was therefore ready to enter a new long trade if we had gotten another bullish bounce at either of the support levels identified.
This was a good call, as we did get such a bounce at 1.3551, and it gave a profitable long trade entry.
The picture has become slightly more bearish, with the price continuing to consolidate between 1.3551 and 1.3667 ever since Tuesday’s bullish movement eventually ran out of steam.
The U.S. Dollar generally remains weak, but what is significant is that the British Pound is not relatively strong, as while other currencies advance against the dollar, the Pound is not. This may have something to do with the fact that the novel coronavirus is spreading in the U.K. at a very rapid rate, with an estimated 2% of the entire population actively infected. Additionally, there is a new strain which has become dominant in the U.K., which is not only seemingly considerably more infectious, but may also be more resistant to the new vaccines.
Despite this gloomy picture, the technical picture still suggests that a long trade from 1.3551 could work out well, but it is probably wisest to stand aside and wait for either a bullish breakout beyond the resistance at 1.3667 or a bearish breakdown below 1.3527 before taking any bias on this currency pair.
There is nothing of high importance scheduled today regarding the GBP. Concerning the USD, there will be a release of Unemployment Claims data at 1:30pm London time followed by a release of ISM Services PMI data at 3pm.