Last Monday’s GBP/USD signals were not triggered, as there was no bearish price action at either of the key resistance levels when they were first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken 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 1.3949 or 1.4008.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Take off 50% of the position as profit when the price reaches 20 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 1.3889, 1.3867, or 1.3803.
Put the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Take off 50% of the position as profit when the price reaches 20 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 last Monday that there was no long-term trend, but we were seeing some bullish momentum in the pound over the short-term as it gained against the greenback. I thought that the price was very likely to soon test the resistances level identified at 1.3867 and 1.3889 just a little way above.
I thought that if the price could get established above 1.3900, that would be a bullish sign, as the price would then have room to rise all the way, potentially, to the big round number at 1.4000 where there is also a key resistance level. I thought that this currency pair may be a good choice for day traders over the day.
These were good calls, as the price rose very strongly over Monday, testing and breaking both the nearby resistance levels as I had expected, before finally turning yesterday in the 1.4000 area.
After reaching resistance confluent with the huge psychological round number at 1.4000, the price fell yesterday as the U.S. dollar made a comeback. This area of resistance truly is a long-term pivotal point and will probably remain strong and unbroken for a while, which should give traders an opportunity for short trades from that area.
I see the best potential opportunity today as a continuing fall to either of the two nearby support levels, ideally the lower one at 1.3867, and then a long trade from any bullish bounce there.
I am also ready to take a short trade if we get another bearish reversal later at the resistance level of 1.4008.
This currency pair may well again be a good one for day traders to focus on today.
Concerning the GBP, the Governor of the Bank of England will be giving a minor speech at 11:30am London time following CPI (inflation) data which was released earlier today. There is nothing of high importance scheduled concerning the USD.