GBP/USD Signal- Jan. 8, 2014

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By: DailyForex.com

 

GBP/USD Signal Update

Yesterday’s signals were not triggered and expired.

Today’s GBP/USD Signals

Risk 0.50%.

Entry should be made between 2pm and 5pm London time today only.

Take the risk off any open trade at 6:30pm London time today.

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 local swing low.

Move the stop loss to break even at 1.6370 and take 50% of the profit at 1.6470. Leave the remainder of the position to run.

Long Trade 2

Enter long at the next bar break of an hourly pin bar or engulfing bar rejecting and closing above the support level of 1.6235. 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 local swing low.

Move the stop loss to break even at 1.6300 and take 50% of the profit at 1.6320. Leave the remainder of the position to 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 1.6475. 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 above the local swing high.

Take profit on 75% of the position at 1.6436, move the stop loss to break even and let the remainder of the position run.

GBP/USD Analysis

As the markets have been awaiting the slew of important news that begins later today around the New York open, the pair was fairly quiet yesterday. The only thing of possible significance was that Monday’s low was not broken to the down side, so the daily pin bar held; in fact its high was broken yesterday. However the resistance provided by the Fib levels at around 1.6325 was too strong to break on such a quiet day:

GBPUSD Signal 1814

As we have not had a retest close to 1.6325, I am reinstating this support level as valid, so am prepared to look for a long trade here.

It can be seen from the chart that we remain well within the long-term bullish channel’s trend lines that have been established since November. The lower, bullish trend line is nicely confluent with the support level at 1.6325 and the 38.2% retracement of the current bullish move.

There is also a good support level below at 1.6235 which is confluent with a significant 50% Fibonacci retrace of the move up since November.

The best trade would probably come from news later today pushing the pair down for a buying opportunity. However there is a short opportunity too and things could go either way, 1.6475 could be a good resistance level.

There is very important news later today at 1:15pm London time for the USD (ADP Non-Farm Employment Change) and again at 7pm London time (FOMC Meeting Minutes), these items are certain to make the pair active. Things should be very quiet before the New York session begins.

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.