My previous GBP/USD signal on 2nd January was not triggered, as unfortunately the bullish bounce at $1.2616 came after the London close.
Today’s GBP/USD Signals
Risk 0.75%.
Trades may only be taken prior to 5pm London time today.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.2686, $1.2651 or $1.2616.
- 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 $1.2730 or $1.2786.
- 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 a little more than one week ago that the technical picture looked consolidative, so I expected that the best potential opportunities which might set up would be a long scalp from $1.2700 or a short scalp from $1.2786.
I was completely wrong as the price fell like a stone that day before stabilising and making a small bullish reversal at my support level of $1.2616.
The technical picture remains quite consolidative still, which is normal ahead of the very major US CPI (inflation) data release tomorrow. We see in the price chart below that the recent price action is weakly bullish, with a potential double bottom forming at $1.2686. However, there is key resistance not far away at $1.2730. Overall, the line of least resistance looks upward.
I think the best opportunity today would be a long scalp from another bounce at $1.2686, followed by a potential short scalp from a short-term reversal at $1.2730.
Teo consecutive higher hourly closes above $1.2730 would normally be a long trade entry for me here under these conditions, but due to the US inflation data release due tomorrow, I think this would not be a wise trade entry.
Concerning the GBP, the Governor will be making routine testimony before the UK Parliament at 2:15pm UK time. There is nothing of high importance scheduled today regarding the USD.
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