GBP/USD Signal- Jan. 6, 2014

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By: DailyForex.com

GBP/USD Signal Update

Thursday’s signals were not triggered and expired. The price did get within 10 pips of our long trade before making our first profit target at 1.6449, but unfortunately it did not come down quite far enough to get us in to what would have been a profitable trade.

Today’s GBP/USD Signals

Risk 0.50%.

Entry should be made between 8am and 5pm London time today only.

Long Trade 1

Enter long at the next bar break of an hourly pin bar or engulfing bar rejecting and closing above the support level of 1.6325. If this level is not touched and rejected by the same hourly bar, or if an hourly bar closes more than a few pips below this level, the trade is immediately invalidated and should not be taken.

Stop loss 1 pip below the lower of the local swing low or 1.6290.

Take profit on 75% of the position at 1.6390, move the stop loss to break even and let the remainder run.

Short Trade 1

Enter short at the next bar break of an hourly pin bar or engulfing bar rejecting and closing below the resistance level of 1.6396. If this level is not touched and rejected by the same hourly bar, or if an hourly bar closes more than a few pips above this level, the trade is immediately invalidated and should not be taken.

Stop loss 1 pip below the local swing high.

Take profit on 75% of the position at 1.6330, move the stop loss to break even and let the remainder run.

Short Trade 2

Enter short at a touch of 1.6475 with a stop loss at 1.6516. Move the stop to break even at 1.6434 and take 50% of the trade as profit, leaving the remainder to ride.

GBP/USD Analysis

Action in this pair has turned bearish since my previous forecast last Thursday, and this morning the higher of the bullish trend lines was broken to the down side. The price fell very sharply all the way down to 1.6410 on Thursday, before pulling back and printing a support turned resistance level at 1.6475. We then did get a small bounce up at 1.6400 when the price reached that level on Friday of about 40 pips, but the level did not hold.

There is important news today for the GBP at 9:30am (Services PMI) and for the USD at 3pm (ISM Non-Manufacturing PMI) London time, so we might see a more active Monday than is usual.

Looking to the future, I am prepared to treat 1.6475 and 1.6396 as likely support turned resistance levels. The support level of 1.6325 is especially interesting as it is confluent with the 38.1% Fibonacci retracement of the upwards move since November.

GBPUSD Signal 1614

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.