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GBP/USD Forex Signal - 18 January 2017

GBP/USD Signal Update

Yesterday’s signals were not triggered as there was insufficiently bearish price action at any of the key resistance levels that were reached.

Today’s GBP/USD Signals

Risk 0.75% per trade.

Trades may only be entered between 8am and 5pm London time today.

 

Long Trades

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2300 or 1.2232.

  • Put the stop loss 1 pip below the local swing low.

  • Move 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 ride.

 

Short Trades

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2388 or 1.2419.

  • Put the stop loss 1 pip above the local swing high.

  • Move 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 ride.

 

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

The British government finally outlined its Brexit plan yesterday and despite going for a hard Brexit, by confirming that Parliament would have a vote on any final deal, boosted the Pound by a lot. This pair then went on to record its biggest 1-day rise since 2008 and is currently trading above its price from 3 months ago, a key metric which suggests that the long-term post-Brexit bearish trend may be over. The chart below also shows the price has broken strongly and cleanly out of a bearish channel which it was locked within.

It will be interesting to see if the price continues to hold up, or whether it falls back down quickly. If it holds up, then the bearish trend will be seen to be over.GBPUSD

Regarding the GBP, there will be a release of Average Earnings Index and Claimant Count Change data at 9:30am London time. Concerning the USD, there will be a release of CPI data at 1:30pm followed by a minor speech from the Chair of the Federal Reserve at 8pm.

Adam Lemon
About 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.

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