My last GBP/USD signal on 28th April was not triggered, as there was no bullish price action when the support levels at $1.2500 and $1.2437 were first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken before 5pm London time only.
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2226 or $1.2139.
- Put the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 25 pips in profit.
- Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2277 or $1.2406.
- Put the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 25 pips in profit.
- Take off 50% of the position as profit when the price reaches 25 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 in my last piece on 28th April that we were seeing extremely strong bearish momentum into new 18-month lows, which is usually very foolish to bet against on the long side. However, I also noted we were getting support at the big round number of $1.2500 at the same time as we saw support in the EUR/USD at $1.0500. I thought that this confluence may be a technical barrier against further US Dollar gains, at least over the short-term.
I was really looking to enter a short trade from a bearish reversal at $1.2624.
This was an OK call as the main direction of the day was downwards, but even after breaking below $1.2500 which I saw as pivotal, the price made a strong bullish rebound later to invalidate my analysis.
The price here fell strongly last week to new long-term lows, before making a bullish rebound at the end of the week.
Despite the long-term bearish trend and the price still not far off that long-term low, we are seeing an important bullish sign – a first higher low at $1.2226.
I think the best approach today will be to stand aside and wait for the price to get established below $1.2226 (bearish sign) or above $1.2277 (bullish sign). It is quite possible that the price will basically hold within this range until the end of today’s London session.
Regarding the GBP, the Bank of England will be testifying before the British Parliament in Monetary Report Hearings at 3:15pm London time. There is nothing of high importance scheduled for today concerning the USD.