Last Wednesday’s GBP/USD signal was not triggered as there was no bullish price action when the price first reached $1.3236.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
Long Trade Ideas
Go long following a bullish price action reversal on the time frame immediately upon the next touch of $1.3219 or $1.3141.
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 Wednesday that it was likely that we would see the price eventually break up from the triangle. However, the long-term trend was bearish in this currency pair, so I thought it may be too early to be thinking seriously about the price rising by much.
I thought the best approach would still be to look for scalps at reversals at the triangle trend lines, either upper or lower.
These were not good calls as the price broke below the narrowing triangle the same day. However, it soon bounced back to continue consolidating in the general area where the price had spent most time.
The price chart below shows that we have continued to see broadly consolidative price action over the past week and quite choppy trading. The situation is maybe very weakly bullish as the nearest key level is supportive, just below the current price, at $1.3219.
We are about to get a lot of key market data, some of which is of extremely high importance for both currencies – British inflation data and then the US FOMC release.
A good approach could be to scalp against any spike that reaches either of the extreme levels at $1.3141 or $1.3310 soon after the British inflation data release and exit when reversion to the mean movement stops. Then await the FOMC release and wait for an hour after the release to determine a true price direction.
Concerning the GBP, there will be a release of UK CPI (inflation) data at 7am London time. Regarding the USD, there will be a release of Retail Sales data at 1:30pm followed by the FOMC Economic Projections, Statement, and Federal Funds Rate at 7pm.