My last GBP/USD signal on 21st July could have produced a losing long trade from the bullish rejection of the support level which I had identified at $1.1926.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered before 5pm London time Thursday.
Long Trade Idea
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.2082.
- 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 time frame immediately upon the next touch of $1.2191 or $1.2241.
- 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 forecast on 21st July we were seeing bullish signs despite the long-term bearish trend, evidenced mostly by the bullish breakout from a bearish wedge chart pattern, as well as well-defined new support levels and higher lows.
I saw the outlook as bullish if the price remained above $1.1958.
I was correct insofar as the price rose over the day, but it did spend some time below $1.1958. The price also rose over the following days.
The technical picture is now more bearish as although we have seen a slow but steady upwards move over recent days, we have seen downward waves and increased volatility, suggesting the end of the rally has happened.
There is new lower “stairstep” resistance at $1.2191, and as there are no support levels below until $1.2082, the price has plenty of room to continue moving down.
There is renewed strength in the US Dollar, but little action in the Pound as the market awaits tomorrow’s release from the Bank of England.
I think a short trade from another test and rejection of $1.2191 from below could be a good opportunity to enter a short trade in this currency pair today.
Regarding the USD, there will be a release of ISM Services PMI data at 3pm. There is nothing of high importance due today concerning the GBP.
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