Yesterday’s signals produced a profitable short trade following the bearish doji candlestick rejecting the resistance level at 1.3657. It may be wise to close the trade, as there are hints that the Dollar may retrace its recent fall.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Short Trade
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.3657.
Place 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.
Long Trades
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.3560 or 1.3500.
Place 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.
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 I had a bearish bias, and this was a correct approach to take, as the price fell over the course of the day to make new lows. The Pound again looks the weakest of all the major currencies against the Dollar. The Dollar has weakened a little over recent hours following the slightly dovish FOMC release yesterday, but the Pound’s move against it is weak. Technically, yesterday’s action was bounded perfectly by the support and resistance levels I had earlier identified at 1.3657. I do not wish to take a bias today although I would only be comfortable trading this pair short, unless the U.K. due during the London session is significantly better than expected. This pair should remain the most useful vehicle to trade against any renewed weakening of the U.S. Dollar., but there is a cluster of support levels between 1.3500 and 1.3560 which suggest the pace of downwards movement is going to slow down for now.
Concerning the GBP, there will be a release of Services PMI data at 9:30am London time. Regarding the USD, there will be a release of ISM Non-Manufacturing PMI data at 3pm.