My previous GBP/USD signal on 14th November was not triggered as there was no bearish price action when either of the identified resistance levels were first reached.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be entered before 5pm London time today.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2517, $1.2465, or $1.2446
- 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.
- Remove 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 Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.2549 or $1.2587.
- 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.
- Remove 50% of the position as profit when the price reaches 25 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 in my previous forecast for the GBP/USD currency pair that the picture was weakly bullish, so I was prepared to take a cautious long trade from a bullish bounce at $1.2256.
This was a good call as the price rose over the day, although it did not reach that support level, and the rise was much stronger than I expected.
The technical picture has become much more bullish since then as the US Dollar gave up a lot of ground after lower-than-expected US CPI (inflation) data was released.
The price continued to rise into yesterday, reaching a new 2-month high, before retreating at what has previously been a very pivotal resistance level at $1.2549. This may be the start of a bearish double top chart pattern.
The US Dollar is regaining some ground now as yesterday’s FOMC meeting minutes showed the US Federal Reserve is not yet in a hurry to begin cutting rates, making sentiment on the Dollar a bit more hawkish. On the other hand, maybe not too much should be read into that, as we may be seeing a partial bearish retracement after such a strong upwards move.
I am not confident about today’s price direction, but I think that if we get two consecutive lower hourly closes below the big round number at $1.2500, we will see a stronger fall over the rest of the day, so the area between $1.2500 and $1.2517 looks likely to be pivotal.
Concerning the USD, there will be a release of Unemployment Claims data at at 1:30pm London time followed by Revised UoM Consumer Sentiment at 3pm. There is nothing of high importance scheduled today regarding the GBP.
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