My previous GBP/USD signal on 29th December was not triggered, as there was no bearish price action when the price first reached the resistance level which I had identified at $1.2052.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered between 8am and 5pm London time today.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2002 or $1.1904.
- 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 $1.2049, the trend line shown within the price chart below currently sitting at about $1.2074, or $1.2111.
- 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 previous forecast for the GBP/USD currency pair on 29th December that the technical picture was looking increasingly bearish due to new resistance levels at $1.2052 and $1.2111. However, I also noted buying at $1.2000, and I thought the price would remain between $1.2000 and $1.2052 over the day, and I was wrong about that.
The condition of stiffening bearish resistance overhead offset buying below $1.2000 has persisted, but the situation is looking increasingly bearish. This is probably due to yesterday’s release of FOMC meeting minutes which showed the Fed very determined to stick to elevated interest rates for some time, which is likely now boosting the US Dollar.
We can draw a bearish trend line showing the downwards pressure on the price, and now all that is left for bears is to push the price decisively below the support level confluent with the big round number at $1.2000.
If that level breaks, the price could plunge all the way to the support at $1.1904 which is also a medium-term double bottom, so a long scalp there could be a good scalp trade.
For longer-term traders, I see short trades from another bearish rejection of $1.2049 or the trend line as good swing trade opportunities.
So far, the round number at $1.2000 is holding, and this can also be a good price are for long scalps.
Regarding the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time. There is nothing of high importance due today concerning the GBP.
Ready to trade our free Forex signals? Here is our UK Forex brokers list to check out.