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My previous GBP/USD signal on 4th September produced a profitable short trade from the bearish reversal at the resistance level of $1.2643 when it was first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be entered before 5pm London time today only.
Long Trade Idea
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2469.
- 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
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2528 or $1.2587.
- 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 that I found it hard to see the price action turning truly bearish today, so I thought the best opportunity which might set up would be a long trade from $1.2600.
This was not a good call, as the day was clearly down, and the best opportunity was a short trade from one of my identified key resistance levels.
We have seen a slightly weak downwards trend here in this currency pair on the strong US Dollar. However, since this week’s open in Asia, we have seen the Dollar weaken substantially. However, the reason for this is really only the strength of the Japanese Yen, which has been talked up by the Governor of the Bank of Japan. As the Yen is bought, US Dollars are being dumped. When this finishes, it does not look likely that the price here will rise by much more.
Technically, it looked earlier as if we were seeing a bearish breakout beyond the top of the recent range confluent with the major round number at $1.2500. However, this breakout now looks in doubt, as we see a bearish pin bar forming on the hourly price chart.
I think the best approach will be to wait and see where the price is one hour after London opens. If it above $1.2500 and rising convincingly, we will likely see more progress to the upside. If the price keeps failing at $1.2500, it will likely fall back into its recent range.
There is nothing of high importance scheduled today concerning either the GBP or the USD.
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