Last Wednesday’s GBP/USD signals produced a profitable short trade from the bearish reversal at 1.3836.
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 1.3953 or 1.4010.
- 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 1.3876 or 1.3831.
- 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 price direction looked very difficult to predict ahead of the release of US FOMC meeting minutes, so I thought that the best approach was likely to be scalping reversals for conservative profits either long or short at key levels.
This was a good call as it was a choppy day, but the resistance level at 1.3836 held nicely for a short scalping opportunity.
The technical picture is more bullish now after Friday’s strong upwards move from the lows around 1.3750. However, the price appears now to be making a bearish failure again at 1.3900 which was a clearly inflective area last Tuesday.
As it is Monday and there are no key items scheduled likely to affect the price of this currency pair today, I think it is likely that there will not be a bullish breakout above the 1.3900 area, and the price will probably fall somewhat instead.
However, if we do get two consecutive hourly closes above 1.3905, I will take a bullish bias and expect the price to rise as high as the next resistance level at 1.3953.
If the price does fail around 1.3900, it is hard to say how much lower it will go. I see the support level at 1.3831 as likely to be significantly stronger than 1.3876 so that would probably make a reasonably good short trade profit target.
There is nothing of high importance scheduled today concerning either the GBP or the USD.