GBP/USD Signal- Feb. 6, 2014

Adam Lemon

 

GBP/USD Signal Update

Yesterday’s signals were not triggered and expired.

Today’s GBP/USD Signal

Risk 0.50%.

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

Long Trade 1

Enter long with a stop buy order at a next bar break of an hourly pin or engulfing bar after a first touch and rejection of 1.6235. The trade is invalidated once an hourly bar closes below this level.

Stop loss at the local swing low.

Move the stop loss to break even when the trade is 25 pips in profit and let it run.

Short Trade 1

Enter short with a limit sell order at the first touch of 1.6475.

Stop loss at 1.6525

Move the stop loss to break even when the trade is 25 pips in profit and let it run. Take 50% of the profit at 1.6375.

GBP/USD Analysis

Yesterday was another quiet day, following the range of the previous day. However a second consecutive bullish pin bar was printed on the daily chart, suggesting that the next move will be bullish. We found some support this week at the 50% Fibonacci retrace of the move up at 1.6260.

It is probable that the previous support level of 1.6325, which did give a small bounce earlier this week, will now act as resistance. Below is a likely supportive level at 1.6235 which is quite confluent with the 50% Fibonacci retracement of the recent upwards move. The 1.6235 level has acted as long-term resistance and was very supportive when last hit. It was also a weekly open price when it was last supportive.

Above us the closest significant resistance is at 1.6475 which I look to for a short touch trade as we are more than a typical day’s range away from that price. It flipped from support to resistance last week and is also confluent with a minor Fibonacci level (23.6%) from the recent move up:

GBPUSD Signal 2614

There is important news due today during the London session for the GBP at Noon London time (BoE announces the official bank rate and the Asset Purchase Facility). Concerning the USD, there is the Trade Balance and Unemployment Claims at 1:30pm. This means the morning should be quiet but the afternoon lively, although the market is really waiting more to hear Friday’s news, so today may well not see as large a move as might be expected.

 

Adam Lemon

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.
Learn more from Adam in his free lessons at FX Academy

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