GBPUSD: Bearish but 1.2500 holds up
Yesterday’s signals were not triggered, as none of the key levels were reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered between 8am and 5pm London time today only.
Long Trade
Long entry upon the next touch of 1.2429.
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.
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 Trades
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2572, 1.2606, or 1.2610.
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.
Take off 50% of the position as profit when the price reaches 20 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 yesterday that there was a long-term bearish trend and every reason to be bearish, but I would prefer to see the price either retrace to resistance or get established below 1.2500 before entering any new short trades. I would not want to take a long trade here today. This first part of this statement was a good call, as the price rose over the course of the day after reaching a level about 10 pips away from the big round number at 1.2500.
The price has now retraced to almost touch the resistance at 1.2572, and the action seems to be turning bearish, so if the price falls firmly between 8am and 9am London time as the London session gets underway, it would make sense to take a bearish bias.
The second round of the voting to select a new British Prime Minister took place yesterday and Johnson’s position still looks very difficult, but not impossible, to beat. Johnson will be seen as the hard Brexit candidate, so his progress can be expected to depress the Pound over the short term.
Regarding the GBP, there will be a release of U.K. CPI (inflation) data at 9:30am London time. Concerning the USD, there will be releases of the FOMC Economic Projections, FOMC Statement, and Federal Funds Rate at 7pm, followed half an hour later by the usual press conference.