GBP/USD Signal- Dec. 5, 2013

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By: DailyForex.com

GBP/USD Signal Update

Yesterday's Long Trade 1 was triggered by a pin bar that just touched 1.6325, marked at (1) in the chart below. I would not have taken this trade however, as the entry was meant to be much closer to 1.6325, and the long break of the pin bar was very high at 1.6369, only 19 pips away from the first target, so hardly worth taking as the reward to risk profile was not good. Nevertheless, it was a winning trade, with half of the trade coming in at +19 pips, and the other half unfortunately being stopped out at break even. With a total risk of 0.50% and a stop loss of 79 pips, the equity win would have been +0.10%.

Today’s GBP/USD Signal

Risk 0.50%
Entry should be made between 8am and 5pm London time today only.
Enter long with a limit order at a touch of 1.6260. Happily, this area is confluent with today's S3 pivot level.
Stop loss at the lower of local swing low, initially 1.6218.
Move stop loss to break even and take profit on 50% of the position at 1.6325.
This could be a really great trade as the level should be fairly confluent with the lower bullish trend line shown in the chart below:

GBPUSD Signal 12513

GBP/USD Analysis

The pair may move strongly today, but probably not before 11:15am London time when we get some important GBP data and news coming through. There is then later important USD news at 1:30pm London time. Yesterday's low was 1.6325, a support level I called yesterday, and my bullish bias was correct and is maintained today. We have a minor new support level established yesterday as resistance turned into support at 1.6369, which is also today's daily pivot. Although bias is bullish, there could be wild swings later today, especially if anything unexpected happens with the news items. I am confident in a long touch trade at 1.6260 as it is very far away, is likely to be strong support, and is currently confluent with the bullish trend line.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.