Last Wednesday’s GBP/USD signals were not triggered, as there was insufficiently bullish price action when the support level at 1.3942 was first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken between 8am and 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3860, 1.3910, or 1.4021.
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
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3759 or 1.3653.
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 Wednesday that the technical picture seemed to have become less bearish, although there was strong selling from the 1.4000 area which I thought might continue. I did think that the bulls would probably be able to push the price up to at least 1.4000 over the day.
I thought the best course of action would be to look to trade a reversal at any key support or resistance level – the further away from the 1.3975 area, the better.
I was correct in thinking that selling from 1.4000 might continue, as that round number held as strong resistance for the rest of the day, although the rest of my analysis was not very useful.
The Forex market in general is dominated by a strong U.S. dollar that has advanced firmly against most currencies, including the British pound, which finally seems to have given up its relative strength. Such strong movements in the U.S. dollar usually overwhelm smaller majors like the British pound. So, we have a bearish environment which is matched by a bearish short-term technical picture with the resistance level at 1.3860 holding the price down. Another bearish factor is that the EUR/USD currency pair has broken to a new multi-month low and that should make it easier for this currency pair to move lower.
I expect a weak down day today and so I will look for a short trade from a bearish reversal which may set up later off 1.3860. However, it is a quiet Monday, so I do not expect any directional movement to run very far over the course of today.
Regarding the GBP, the Governor of the Bank of England will be giving a minor talk at 10am London time. There is nothing of high importance concerning the USD scheduled for today.