Last Wednesday’s GBP/USD signals were not triggered, as there was no bearish price action when the resistance level identified at 1.3860 was first reached.
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 1.3881 or 1.3953.
- 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 Idea
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3817, 1.3774, or 1.3714.
- 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 had become more bearish as there were no obvious key support levels above 1.3714, so the price had considerably room to fall in the direction of the long-term trend.
I was looking for a short trade from a firm bearish reversal at the key resistance level of 1.3860.
This was a good call in the sense that Wednesday was a down day, although the price did not respect the resistance level at 1.3860.
The price continued falling until Friday, getting to within about 15 pips of the support level at 1.3714, before making a bullish reversal. The price has continued to rise within this reversal which is ongoing – we see new higher support being printed at 1.3817.
It is anyone’s guess how much higher the price will go, against the long-term bearish trend. I do not want to take any long trades in this currency pair yet. The key thing to watch is whether the support levels at 1.3817 and 1.3774 continue to hold. Once they break, the bearish trend is likely to resume.
I will take a bearish bias and enter a short trade in this currency pair if we get two consecutive lower hourly closes below 1.3774, targeting 1.3714.
There is nothing of high importance scheduled today regarding either the GBP or the USD. It is a public holiday in the USA today.