My previous GBP/USD signal last Monday was not triggered, as there was no bullish price action when support was reached.
Today’s GBP/USD Signals
- Risk 0.75%.
- Trades may only be entered between 8am and 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 $1.2710 or $1.2670.
- 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 $1.2732, $1.2759, or $1.2823.
- 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 two days ago that the price action was showing a bearish flow but the price had been refusing to get below the support level at $1.2727. I thought that a bearish breakdown below $1.2727 would seem to have to take the price all the way to $1.2670.
This was a great call as it forecasted correctly the breakdown to $1.2670, although the move did not complete until the following day.
The technical picture is dominated by the descending price channel shown within the price chart below – its symmetry suggests it will be powerful and act as an engine pushing the price down. There is more downwards pressure added by horizontal resistance levels close overhead.
We just had a release of UK CPI data which showed there has been a slightly stronger fall in UK inflation than was expected, with the annualized rate dropping from 4.0% last month to 3.4% this month. This news pushed the price up slightly, but it already seems to have run out of steam without even touching the nearest resistance level.
I will be happy to take a short trade from a bearish rejection of either the upper trend line of the price channel, or either of the horizontal resistance levels, despite the relative strength of the British Pound today.
There is nothing of high importance scheduled today concerning the GBP. Regarding the USD, the FOMC will be releasing its Federal Funds Rate, Statement, and Economic Projections at 6pm London time.
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