Last Wednesday’s GBP/USD signals gave an extremely profitable short trade from the bearish reversal by the hourly pin candlestick at 1.4123.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken before 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 1.3832 or 1.3966.
- 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 1.3714, 1.3693, 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 resistance level at 1.4123 was likely to be the day’s pivotal point.
However, I was only looking to take a long bias if we had gotten two consecutive hourly closes above that level during the first few hours of today’s London session.
This was an excellent call as this level was extremely pivotal and marked the high of the day almost to the pip. After reversing there, the price has just kept falling. We have seen a strong advance by the USD over recent days since Wednesday’s FOMC statement and projection which has killed the “reflation trade” and sent the dollar and Japanese yen soaring higher against riskier currencies and European currencies (with the GBP of course falling into both categories).
The bearish momentum has been strong, so seems likely to continue as we begin this week, at least for some time. Technically, it looks likely to depend upon whether the resistance level at 1.3832 holds or not, as it looks likely to be today’s pivotal point. I am prepared to take a short trade from this level if it holds, or a long trade targeting if we get two consecutive hourly closes above 1.3832. I am prepared to trade in both directions as we have had high volatility so a strong short-term bullish reversal is not out of the question, but that would likely only be a short-term trade.
There is nothing of high importance due today regarding either the GBP or the USD.