My previous GBP/USD signal on 12th November produced a losing long trade from $1.2813 but a more profitable short trade following the bearish breakdown below that level.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades may only be entered before 5pm London time Tuesday.
Long Trade Ideas
- Long entry following a bullish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.2575 or $1.2502.
- 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 Idea
- Short entry following a bearish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.2603, $1.2658, or $1.2674.
- 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 almost two weeks ago that the support level at $1.2813 looked pivotal, it might be possible to enter a short trade there, and this was a good call and produced a profitable trade.
The price has continued to fall firmly since then, moving a few hundred pips lower on USD strength, although it is true that European currencies such as the British Pound are relatively weak.
Unlike the EUR/USD currency pair I would not say this was established within a long-term trend, but we are getting close to it.
The price traded at a new 6-month low last Friday as the US Dollar continued its advance, but this new week has seen the US Dollar open lower, producing a weekend gap higher in this currency pair. The price now seems to have become established above the former resistance level at $1.2575 which now seems to be supportive.
The next test is whether the price can break above $1.2603 which is confluent with the round number at $1.2600. The price might turn bearish later, but I see the main opportunity today as a quick long trade triggered by two consecutive higher hourly closes above $1.2603 during the first half of today’s London session, provided that the candlesticks do not have large upper wicks.
Entering on a short-term breakout is usually the best way to trade this currency pair, which tends to move quickly.
There is nothing of high importance due today concerning either the GBP or the USD.
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