Yesterday’s signals were not triggered, as the bearish price action took place above 1.4000.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken between 8am and 5pm London time today.
Long Trades
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.4018 or 1.3917.
Put the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is 25 pips in profit.
Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
Short Trades
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.4058 or 1.4092.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 25 pips in profit.
Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to run.
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
I wrote yesterday that this pair is the major focus of the Forex market now, and traders should be taking an interest in what happens next. What happened next was another reasonably strong bullish movement after a pull back, which broke the psychologically important 1.4000 level with relative ease. The price is now trading above 1.4000 and may have established new support above it, at 1.4018. These are new 18-month highs which have not been seen since the day the U.K. voted to leave the European Union. Additionally, the Pound is doing better than the Euro, so even though the movement is driven primarily by strong and persistent weakness in the U.S. Dollar, there is some real buying of the Pound as well.
There is certainly still a danger that the price will make a long-term bearish reversal from this area and quickly drop back below 1.4000. Yet the price is still acting bullishly, and if it gets above 1.4100 it could advance much further. I have a bullish bias.
Concerning the GBP, there will be a release of Average Earnings Index data at 9:30am London time. Regarding the USD, there will be a release of Crude Oil Inventories data at 3:30pm.