My previous GBP/USD signal on 26th September might have produced a losing short trade from the bullish bounce at the support level which I had identified at $1.2168.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken prior to 5pm London time.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2175 or $1.2102.
- 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 Ideas
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2229 or $1.2274.
- 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 I would be happy to enter another short trade following a retracement to a resistance level, or if we got a consolidation above a support level lasting several hours eventually producing a breakdown.
This was a good call as we did get a consolidation during the first two thirds or so of the London session before we saw a bearish breakdown below the $1.2170 level after it had initially held earlier. This produced a bearish run over the rest of the week down as far as $1.2111 before the price rebounded quite strongly.
Despite the rebound at the end of last week, the price action is again looking heavy and bearish, suggesting another breakdown below today’s low is very likely to happen soon, although maybe not today.
The price has rejected the round number at $1.2200 and looks set now to test $1.2175. This will probably be today’s pivotal point.
If we get two consecutive lower hourly closes below $1.2175 during the first half of today’s London session, I would be prepared to enter a new short trade targeting $1.2105, if the reward to risk ratio looks good when such a trade sets up.
I would not enter a long trade today.
Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time. There is nothing of high importance scheduled today concerning the GBP.
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