.Last Tuesday’s GBP/USD signal was unfortunately not triggered as the bearish price action took place above the key resistance level, I had identified at $1.3353.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
Long Trade Idea
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.3236.
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.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.3310.
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.
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 Tuesday that the technical picture remained weakly bearish. I thought that it was likely that the price would rise to test $1.3350 and that a bearish reversal there during the London session could be a good short trade.
This was a good, accurate call although the price made a high about 10 pips higher than $1.3350.
The British pound was one of the weakest major currencies last week and despite its current small bullish bounce, looks likely to fall further when the US dollar next begins to strengthen.
The short-term technical picture is of a consolidating triangle, the upper trend line of which continues to hold after being tested again just a few hours ago. Despite the support level at $1.3236, I think it looks likely to break down rather than up.
I will take a bearish bias if the price can get established later during today’s London session below $1.3200, although I think this is unlikely to happen today.
The British pound is clearly showing weakness which stands out, so it will probably be wise to only look for short trades here, unless you want to make a long scalp from a first touch of $1.3236 or the lower trend line of the triangle shown in the price chart below. I think the lower trend line will be a better bet than $1.3236.
There is nothing of high importance due today regarding either the GBP or the USD.