GBPUSD: Continuing to sell off from post-election high
Yesterday’s signals were not triggered, as there was no bullish price action at 1.3356 and the level at 1.3249 was reached after the London close.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken prior to 5pm London time today.
Long Trade Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3249 or 1.3081.
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 Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3305 or 1.3379.
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 the initial bullish movement had probably played out already, and I expected the day would most likely be a down day, but perhaps not by much. I only wanted to be bullish if the price ended the New York session above 1.3329 and it did not. It was a down day yesterday and the price has continued to fall during the Asian session so overall this was a good call.
What we have seen in this pair is a classic case of the market reacting to an event and then countering that reaction, with the price exceeding 1.3500 as soon as the exit poll showed a landslide result in the British election for the Conservative Party, and then selling off ever since. We also see that when we get very high volatility one day, such high volatility tends to continue for a few days, with a lot of price movement happening in this currency pair.
Technically, the support level at 1.3249 is very crucial – it is approximately the halfway point of Thursday’s move and is also a key psychological level (1.3250). If this level holds today it would probably signal the price will rise again by some amount tomorrow, so I have no doubt that this is likely to be today’s pivotal point. I would be bearish after a couple of hours below it and bullish if it continues to hold up over the first few hours of the London session.
There is nothing of high importance due today regarding the GBP or the USD.