GBPUSD: Very bearish below 1.2500
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 entered before 5pm London time today.
Long Trade Idea
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2429.
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 Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2481.
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 the probability was still in favour of lower prices, and there was a strong bearish trend here which is supported by both currencies in the pair, particularly the British Pound. I was ready to take a bearish bias on this currency pair if the price was below 1.2500 at 9am London time on above-average volatility. It was, and the price moved lower from there, so this was a good call.
The price is again falling over the short-term, although London has not opened yet at the time of writing, but it looks as if the price is going to fall further over the course of today and maybe hit the key support level at 1.2428.
I would like to take a bearish bias today below 1.2482, but there is key UK data due soon which could move the price in an unpredictable way. We have a long-term bearish trend and daily closes at multi-month lows, supported by fundamental reasons for a weakness in the British Pound, which are bearish signs.
I am basically very keen on short trades on this pair today.
Regarding the GBP, there will be releases of GDP and Manufacturing Production data at 9:30am London time. Concerning the USD, the Chair of the Federal Reserve will be testifying before the House of Congress at 3pm, and there will be a release of FOMC Meeting Minutes at 7pm.