GBPUSD: Very bearish new 2-year low
Yesterday’s signals were not triggered, as none of the key levels were ever reached.
Today’s GBP/USD Signals
Risk 0.75% per trade.
Trades must be taken before 5pm London time today only.
Long Trade Ideas
- Go long following a bullish price action reversal upon the next touch of 1.2104 or 1.2000.
- 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.
Short Trade Ideas
- Go short following a bearish price action reversal on the 1H1 time frame immediately upon the next touch of 1.2212 or 1.2280.
- 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 20 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 as markets are starting to see a no deal Brexit as a very real possibility at the end of October, this had sent the Pound tumbling to new 28-month low prices and it was quite likely that the price would fall further, although in these situations, bottoms can come very suddenly and unpredictably.
I was ready to again take a bearish bias today if the price is below 1.2100 at 9am or 10am London time.
My more cautious approach paid off, as the price recovered a little over the past 24 hours, retracing by a maximum of about 50 pips from its low.
The picture remains generally bearish and the new long-term low price made yesterday is a very bearish sign. However, I again want to see the price below 1.2100 at 9am or 10am London time before taking a bearish bias. Alternatively, a retracement to 1.2212 and a bearish reversal there would also make me take a bearish bias.
It could be very risky to enter any new trade later in the New York session as there is a key FOMC data release due then.
There is nothing of high importance due today concerning the GBP. Regarding the USD, there will be a release of ADP Non-Farm Employment Change data at 1:15pm London time, followed by the FOMC Statement and Federal Funds Rate at 7pm and the FOMC Press Conference half an hour after that.