My previous GBP/USD signal on 30th September was not triggered.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades may only be taken before 5pm London time Wednesday.
Long Trade Ideas
- Long trade entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.3218 or $1.3155.
- 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
- Short trade entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.3357 or $1.3458.
- 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 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 last Monday that despite the bullish conditions the price action was printing “railroad tracks” on the daily chart. I thought that playing the range might have been a good idea, but neither edge of the range was reached during that day’s London session.
The technical picture has become more bearish now. Looking at the price chart below we can see that the price tried to get above $1.3420 several times and kept failing, and then descended and finally broke down below support.
The bearishness has been given a tailwind by events in the Middle East yesterday, with Iran escalating the situation with a large-scale ballistic missile attack on Israel. Although there were no casualties and relatively little damage, the pictures were dramatic, and Israel and America have now vowed to attack Iran jointly at some point over the coming days. This will probably contribute to a positive environment for the USD and a negative environment for risky currencies such as the British Pound.
I therefore see the best potential trade opportunity here today as a short trade from any reversal at the resistance level of $1.3357. There might be another area of resistance even closer than that at $1.3315.
There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be the ADP Non-Farm Employment forecast at 1:15pm London time.
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