GBP/USD Forex Signal - 30 May 2017

Last Thursday’s signals were not triggered as there was no bullish price action at 1.2928 or 1.2910.

Today’s GBP/USD Signals

Risk 0.75% per trade.

Trades may only be entered between 8am and 5pm London time today.

Long Trades

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2772 or 1.2739.
  • Place 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.
  • Remove 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 1

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2850.
  • Place 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.
  • Remove 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 last week about how this pair was running out of bullish momentum and repeatedly failing to get established above 1.3000, and if this situation would continue for much longer, the price would be likely to break down heavily. This is the scenario that played out, with the Pound falling meaningfully and the price level of 1.2850 truly now standing out as a key level of resistance or potential support if the price could break up above it. 

This pair is likely to be volatile over the next couple of weeks, as on one side we have U.S. Non-Farm Payrolls data, a crucial indicator of the health of the U.S. economy, and on the other, we also have the British General Election on 8th June next week. It is possible that the Pound’s fall has been sparked at least partially by new opinion polling suggesting a significantly closer election race than had been widely expected, with one poll suggesting only a 5% gap between the parties. Should the opposition Labour Party manage to secure a workable majority in the British Parliament, the Pound would be almost certain to fall very sharply, with a 10% drop in the price of this pair being quite possible overnight. Betting markets are suggesting that the chance of this outcome is only about 8%, however. Conversely, if the Conservatives do win a large majority, the Pound is highly likely to rise, and the continuation of that move will tell us a lot about how the markets view the long-term prospects of the British currency.

The action so far today suggests further downwards movement towards the support level at 1.2772.GBPUSD

There is nothing due today concerning the GBP. Regarding the USD, there will be a release of CB Consumer Confidence data at 3pm London time.

Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.