Last Monday’s GBP/USD signals produced a nicely profitable long trade from the strong bullish bounce at 1.3806.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered from 8am to 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 1.3925, 1.3929, or 1.3977.
- 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 1.3836 or 1.3806.
- 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 Monday that the price was consolidating at the support level of 1.3806. This level was likely to hold until New York comes online, and if it continued to hold during the first hour or so of the New York session, we may well see a strong rise.
This was a good call insofar as the level was very pivotal, and it did produce a very strong price rise. However, the rise happened right at the start of the London session, not the New York session, so my timing was off.
The wider technical situation remains broadly unchanged: the price is in a wide consolidation between about 1.4000 and 1.3800. However, the chart looks more bearish, as we are beginning to see a pattern of important lower lows and lower highs within this consolidation.
The price is right in the middle of the consolidation zone, so neither bulls nor bears seem to have the upper hand right now.
The key driver of the price remains the U.S. dollar, which is relatively strong. If this trend continues, we can expect to see still lower prices here over the coming weeks.
As we begin to see a bearish tilt, I prefer to look for short trades rather than long trades, so I will take a bearish bias if we get a firm reversal at any of the key resistance levels. When any short trade is open, be careful and ready to exit if the price begins to turn bullish anywhere near one of the key support levels. Both 1.3836 and 1.3806 look likely to be strong support levels, so cautious long trades could be a good bet from either level also.
Regarding the USD, there will be a release of ADP non-farm employment change forecast data at 1:15pm London time. There is nothing of high importance due today concerning the GBP.