My previous GBP/USD signal on 1st November may have triggered a great long trade from the bullish bounce at $1.2096 which was the low of the day.
Today’s GBP/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2256, $1.2236, or $1.2188.
- 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 $1.2312 or $1.2337.
- 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 we might see a long-term bullish reversal from the support levels above $1.2000.
This was a good call as the price found support that day at $1.2096, and has not fallen back below that level since, but has since risen slowly but consistently from there since.
The price chart below shows we have a weak bullish impulse, with the key low which should hold to maintain the bullish technical picture at $1.2256. This level looks likely to be strong support due to both the price action which rejected it and due to its confluence with a major quarter number at $1.2250.
I would be prepared to take a cautious long trade from a bullish bounce at $1.2256.
There was a release of UK claimant count data earlier today which came in slightly higher than expected, suggesting a slowing economy. The release pushed the Pound slightly higher.
Support and resistance levels are likely to hold until the US CPI data release due as the US session gets underway. This could push the price anywhere if the numbers show a surprise, especially on the short side if inflation has fallen by considerably less than is widely expected, or even risen.
The best strategy for trading the US CPI data release will probably be to look for a spike leading to a failed test of one of the key support or resistance levels, and trading any reversal on a very short time frame.
Concerning the USD, there will be a release of CPI (inflation) data at at 1:30pm London time. There is nothing of high importance scheduled today regarding the GBP.
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