My previous GBP/USD signal on 3rd July produced a losing short trade from the bearish rejection of the resistance level which I had identified at $1.2722.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken before 5pm London time today.
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2862 or $1.2826.
- 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 run.
Short Trade Idea
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.3000.
- 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 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 in my previous forecast for the GBP/USD currency pair that the price would likely show little directional movement over the day, but I did see a chance for a short scalp trade from $1.2722. This was a good call as there were a few short pips to be scalped there during the London/New York overlap session, but not enough to make a valid swing trade.
The technical picture now is much more bullish, with the price having just reached a new 15-month high not far below the round number at $1.2900. There are no real potential resistance levels close by, although the big round number at $1.3000 could be at least a temporary obstacle if reached. The price chart below shows the trend of the past few days is well captured by a linear regression study, indicating that this is likely to be a more persistent short-term trend.
This currency pair is also well traded at breakouts like this one.
The first test of what will happen next will likely be a test from above of the former resistance level at $1.2862 – if it holds, we will probably see a strong continuation of the upwards price movement.
The US Dollar is generally weak, and in fact is the weakest major currency right now. The British Pound is one of the stronger major currencies, backed by a central bank that still looks likely to need more tightening over the coming months, so there are good reasons both technical and fundamental to be trading this pair long.
I will be happy to enter a long trade from a bullish bounce we might get later today at any of the identified support levels.
There is nothing of high importance scheduled today concerning the GBP or the USD.
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