My previous GBP/USD signal on 5th January was not triggered, as there was no bullish price action when the price first reached the two support levels that day.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken before 5pm London time today only.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2111, $1.2034, or $1.2002.
- Place the stop loss 1 pip below the local swing low.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2221 or $1.2343.
- Place the stop loss 1 pip above the local swing high.
- Move the stop loss to break even once the trade is 25 pips in profit.
- Remove 50% of the position as profit when the price reaches 25 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 in my previous forecast for the GBP/USD currency pair on 5th January that if the support level near $1.2000 broke down, the price could plunge all the way to the support at $1.1904 which was also a medium-term double bottom, so a long scalp there could be a good scalp trade.
This was a good call as once the price broke below $1.2000 it quickly fell to $1.1904. However, that lower level was no supportive as I had anticipated it would be.
Despite this bearish turn less than one week ago, the technical picture is now weakly bullish as the price has broken bullishly above the descending trend line (shown within the price chart below) which had been suppressing the price. Additionally, the key resistance level at $1.2111 looks to have flipped cleanly to become new support. These are bullish signs.
The price is holding up but is not showing any bullish momentum over the short-term, so I am weakly rather than strongly bullish. The key driver of this pair right now is the USD, which is selling off on improved risk sentiment in the market.
As we will get very key US CPI (inflation) data tomorrow, this pair is likely to trade within a narrow zone before that release.
I think the best approach today will be to wait and hope for a retracement to $1.2111 and to look to take a long scalp trade there, or a potential swing trade beginning as a scalp trade.
There is nothing of high importance due today regarding the GBP or the USD.
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