GBP/USD Forex Signal: Evenly Balanced Consolidation Near 2.5 Year High

My previous GBP/USD signal on 18^th September was not triggered.

Today’s GBP/USD Signals

• Risk 0.75%.
• Trades must be entered prior to 5pm London time Tuesday.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3357 or $1.3261.
• 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 ride.

Short Trade Idea

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.3458.
• 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.

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GBP/USD Analysis

I wrote in my previous GBP/USD forecast on 18^th September that the support level at $1.3155 was likely to be the pivotal point of the day, and it was. However, I had thought that the price would break below that level and that short scalps would be appropriate there, which was not how things worked out.

The technical picture now is much more bullish, with the price last week reaching a new 2.5-year high price. However, since reaching that high, the price action has been strongly and evenly consolidative, with the price action printing “railroad tracks” on the daily chart. This means that traders have a clear range to play until we get a breakout, and the range is quite wide, about 100 pips between $1.3357 and $1.3458.

I think the only opportunity which might set up today, due to it looking like a typically quiet Monday, would be a long trade from a bullish bounce at $1.3357.

Longer-term traders may want to enter a long trade following a daily (New York) close above $1.3458.

There is nothing of high importance due today concerning either the GBP or the USD.

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