Last Thursday’s signals may have been triggered upon the bearish rejection of the resistance level identified at 1.2703, which would have given a profitable trade, but the price action was arguably not quite bearish enough for an entry. The level capped the high of the day very precisely.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be entered and closed by 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 1.2703.
- Place 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.
Long Trades
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2600 or 1.2536.
- Place 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.
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 last Thursday that there was a long-term bearish trend line at 1.2700 confluent with a round number and horizontal resistance, so this level was becoming still more pivotal. I was ready to be bearish after a bearish reversal from any first test of 1.2703 and would be more confident in a further fall if the price could break below 1.2600.
This was a very good call, as the price made a high at 1.2703 and has not managed to exceed it yet. This level continues to look pivotal. There is a clue of bearishness as the long-term bearish trend line still continues to hold above the current price, while the lower trend line of the former consolidating triangle has been broken.
A quick short trade off a rejection of 1.2700 would be an idea set-up to watch out for. A sustained break above 1.2700 would be a bullish sign but is unlikely to happen. I would take a bearish bias if there is a clear rejection of 1.2700.
There is nothing important due today concerning either the GBP or the USD.