GBPUSD: Strongly short-term bullish
Yesterday’s signals were not triggered, as there was no bearish price action at any of the resistance levels, all of which were reached yesterday.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm London time today.
Long Trade
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2639, 1.2610, or 1.2606.
- 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 1.2750 or 1.2828.
- 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 20 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 the price action seemed to be turning bearish, so if the price fell firmly between 8am and 9am London time as the London session got underway, I thought that it would make sense to take a bearish bias.
This was a useful and good call insofar as it would have kept anyone out of trouble, with the price rising over the day from even before the London session began. The dovish FOMC release sent the USD falling against more or less every other currency, and strangely, the British Pound was one of the major risers against it. This suggests that something is going on with the Pound, and it may be that there are rumours of an improving position for Jeremy Hunt in the contest to be the next British Prime Minister, as he is seen as softer on Brexit than the current front-runner Boris Johnson.
The upwards movement over the day was very strong, with several key resistance levels being breached quite easily. Although it is against the long-term bearish trend, it would not be a great surprise if the price continued to rise to test the psychological big quarter-number at 1.2750. The Bank of England will be giving its monthly guidance and rate decision today, which could push the price anywhere anyway.
I take no directional bias on this pair today.
Regarding the GBP, there will be a release of U.K. Retail Sales data at 9:30am London time, followed by the Bank of England’s Monetary Policy Summary and Official Bank Rate and Votes at Noon. The Governor of the Bank of England will be giving a minor speech at 9pm. There are no releases of high importance scheduled for the USD.